–Adds Detail To Version Transmitted At 0830 GMT
–UK Jul PSNB-X Stg0.02bn Vs Stg3.498Bn In Jul 2010
–UK Jul PSNCR -Stg5.646bn Vs -Stg18.533Bn In Jul 2010
–UK Jul PSNB -Stg1.961bn Vs Stg1.350Bn In Jul 2010
–UK Jul CGNCR -Stg4.366bn Vs -Stg2.965bn In Jul 2010

LONDON (MNI) – UK public sector net borrowing shrunk in July
compared to a year ago, boosted by income from the bank levy, stronger
value added tax receipts and a sharp, and likely temporary, improvement
in local government borrowing.

Local government borrowing came in stg2.1 billion better than a
year ago, recording a surplus of stg1.1 billion this July compared with
borrowing of stg1 billion in July last year. National Statistics said,
however, that the improvement in local government finances was “probably
a temporary situation.”

Local government benefited from grants for services such as police
and fire and “they haven’t yet got round to spending those,” a National
Statistics official said.

Public sector net borrowing excluding financial interventions
shrunk to just stg0.02 billion in July compared with stg3.498 billion in
July last year, well below analysts’ median forecast for a stg2.5
billion outturn.

PSNB saw a surplus of stg1.961 billion compared with borrowing of
stg1.35 billion a year ago.

The central government net cash requirement saw a surplus of
stg4.366 billion in July, compared with a requirement of stg2.965
billion a year ago.

July is a strong month for corporate and self-assessment tax
receipts, making it typically the second best month for government
revenues in the fiscal year.

The new bank levy also raised stg660 million in the public
accounts, with National Statistics factoring the income in in advance.

The public finance data also reflect the squeeze on public
spending.

Public sector net investment in July fell to stg2.107 billion from
stg2.904 billion in the same month a year ago.

On the income side, central government also saw a marked
improvement with total current receipts rising to stg52.3 billion in
July from stg49.5 billion a year ago.

In April through July, the first four months of this fiscal year,
total current receipts were up stg7 billion at stg172.3 billion from
stg165.3 billion in the same period a year ago. Cash receipts rose to
stg51.453 billion from stg49.82 billion a year ago.

Value added tax receipts, probably reflecting the VAT hike,
improved markedly. Central government VAT cash receipts rose to stg9.96
billion from stg8.446 billion last July.

Income tax receipts were down slightly on the year, however, at
stg16.417 billion compared to stg16.431 billion a year ago, in part a
reflection of the fact UK earnings growth has been sluggish.

The stg3 billion improvement in the cumulative PSNB-X total for the
fiscal year through July on a year ago, at stg40.1 billion from 43.1
billion, is better than the average monthly improvement needed for
PSNB-X to hit the Office for Budget Responsibility’s 2011-12 PSNB-X
forecast.

–London bureau: 0044 20 7862 7491; email: drobinson@marketnews.com

[TOPICS: MT$$$$,M$B$$$,MABDS$]