Commenting on today's public finance data, John Hawksworth, chief economist at PwC, said:
"The long hot summer also brought some sunshine for the Chancellor, with the public finances £2bn in surplus in July, the largest such July budget surplus for 18 years. That was not just before the financial crisis, but actually before Gordon Brown started spending the war chest he built up in the late 1990s.
"For the first four months of this financial year, the cumulative budget deficit was £12.8bn, around £8.5bn lower than the same period last year and the best outturn for these four months since 2002. While this is partly due to some favourable one-off factors, such as a change in the timing of payments to the EU, there also seems to be a continued underlying improvement in the overall public finances.
"Although it is still early days in the current financial year, the latest data point to public borrowing coming in some way below the OBR's £37.1bn forecast for 2018/19 as a whole. In addition, this year’s structural budget deficit should be comfortably below the Chancellor's 2% of GDP target for 2020.
"This better news on the deficit should give the Chancellor a bit more wiggle room when it comes to his Budget in November. But he will still have some tough choices to make, probably including some tax rises, if he is to fund planned increases in NHS spending and to respond to other pressing demands to ease austerity for schools, local councils, prisons, police and other public services."
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