Excluding state-owned banks, United Kingdom ran a budget shortfall of £10.55 billion in August, lower than a deficit of £11.47 billion in the same month previous year.
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It comes as economists continue to scan for signs of what impact Britain’s June vote to leave the European Union is having on the United Kingdom economy.
There has little effect of Brexit on the United Kingdom economy according to the Office of National Statistics (ONS).
U.K.Treasury chief Philip Hammond, in a statement, said while he recognized that “there may be some hard times ahead”, he was “confident that we have the tools necessary to support the economy as we adjust to a new relationship with the European Union and take advantage of the opportunities that it offers”.
Meanwhile, central government spending rose by 0.8%.
Mr Hammond has already dropped the target of his predecessor George Osborne of turning the budget deficit into a surplus by 2020 but has said he will tackle Britain’s “unhealthy” public finances.
Public spending is going to be a key topic in new Chancellor Hammond’s half budget in November, and whether he’s going to look to push the boat out on spending to offset any Brexit fallout.
But analysts warn that Hammond may not have too much room for fiscal loosening, despite the improvement seen in the August data.
Britain’s budget deficit stood at 4.1 per cent of economic output in the last financial year, down from over 10 per cent in 2010 but still among the highest for a developed nation. “Nevertheless, the public finances are still off track to meet the March budget target”, commented Howard Archer, chief United Kingdom and European economist at IHS Global Insight.
The broader trend for the public coffers was also one of improvement.
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In an assessment of the state of the economy in the three months since the June 23 referendum, the ONS said that while the longer-term effects on the economy could not be determined, the short-term impact has nearly been non-existent.
