Borrowing under Chancellor Philip Hammond surges as deficit doubles

CHANCELLOR Philip Hammond today oversaw a huge surge in borrowing days before his spell at 11 Downing Street comes to an end.

The Office for National Statistics said the UK deficit more than doubled to £7.2 billion last month in the worst June for the public coffers for four years.

The figures come as Hammond prepares to unveil billions more in public sector pay rises next week a year after the Government finally threw off austerity with a £27 billion a year settlement for the NHS. But it also underlines the lack of wriggle room for the next PM despite huge spending commitments by both candidates in the Tory leadership contest.

A 1.5% or £800 million rise in tax receipts to £58.7 billion was dwarfed by a £4.3 billion or 7.2% rise in spending to £64.8 billion. Number crunchers highlighted a £1.2 billion increase in spending and a £400 million rise in EU contributions, though the biggest single factor was an extra £2.1 billion in debt interest payments due to the rise in the Retail Prices Index inflation benchmark used to price index-linked debt.

Borrowing for the three months of the financial year so far stands at £17.9 billion, £4.5 billion more than in the same period last year. Howard Archer, senior adviser to the EY Item Club, said June tax revenues were “pretty lacklustre, which ties in with evidence that the economy is currently struggling”.