UK government borrowing falls as economic recovery boosts tax revenues

LONDON (Reuters) - British public borrowing fell in May from sky-high levels of a year earlier when the government was ramping up a huge spending response to the coronavirus crisis, and there are signs that the recent recovery in the economy was boosting tax revenues.

Borrowing excluding public sector banks totalled 24.3 billion pounds ($33.8 billion) in May, down from 43.8 billion pounds in the same month in 2020, the Office for National Statistics said.

Economists polled by Reuters had on average expected a shortfall of 26.0 billion pounds.

The May figure took the deficit for the first two months of the 2021/22 financial year to 53.4 billion pounds.

 

That was the second-highest on record but was down by almost 38 billion pounds from the April-May period of last year.

Revenues flowing into the public coffers in May rose by 7.5 billion pounds from a year earlier to just under 57 billion pounds, reflecting the pick-up in the economy as coronavirus restrictions were lifted.

Government spending in May fell by almost 11 billion pounds to just under 82 billion pounds.

Finance minister Rishi Sunak has committed to measures worth 350 billion pounds since the start of the pandemic last year, one of the biggest COVID-19 support programmes among the world's main economies and saddling the public finances with a deficit equivalent to 14.3% of gross domestic product in 2020/21.

Sunak, responding to Tuesday's data, repeated his pledge to "get the public finances on a sustainable footing."

($1 = 0.7194 pounds)

 

(Reporting by William Schomberg and Andy Bruce)