Tuesday 21 July 2015 4:44 am

Public sector borrowing falls as income tax receipts hit highest level since records began in 1997

The Office for National Statistics (ONS) said income tax receipts rose by 2.5 per cent in June to £11.5bn, the highest level since records began in 1997.

Read more: July Budget 2015 at a glance

At the same time, corporation tax receipts jumped 13.9 per cent to £1.7bn, also the highest amount on record.

The figures, published this morning, also showed UK government borrowing, excluding banks, fell by 8.3 per cent to £9.4bn in the period. While this was the lowest figure for June in seven years, it was slightly below economists' expectations of £8.5bn.

"Today’s figures suggest that receipts this year continue to grow strongly compared to last year, as was forecast by the Office for Budget Responsibility (OBR) alongside the Budget earlier this month," Rowena Crawford, a senior research economist at the Institute for Fiscal Studies, said.

"The picture for central government spending is, as ever, complicated by timing issues: spending has grown less rapidly so far this year than forecast for the year as a whole, but is expected to pick up over the course of the year."

"Taken together, the government looks so far this year to be on course to enjoy the fall in borrowing forecast by the OBR two weeks ago."

However businesses stressed that, while the chancellor could be on course to beat his borrowing targets, more must be done to restore stability to the UK's public finances.

"There is a realistic chance that borrowing in the entire financial year will be lower than forecast by the chancellor in his Budget earlier this month," said David Kern, chief economist at the British Chambers of Commerce.

"“However, we must not understate the big challenges that the UK faces in restoring stability to our public finances. Britain’s financial sector was hit hard in the recession and, together with lower oil and gas output, our ability to generate tax revenues has been seriously constrained. Therefore, we have to continue to focus on other means to tackle the deficit – including cutting current government spending."

And a HM Treasury spokesperson said: "We have more than halved the deficit, but with debt over 80 per cent of gross domestic product the job is not done."

"That is why we will continue to work through our long term plan to achieve a budget surplus in normal times and secure a better economic future for working people."

The government is busily shrinking net borrowing (Source: ONS)