Public finances weaker than year before

THE UK's creaking public finances improved slightly in July but were still weaker than a year ago, official figures showed today.

Chancellor Alistair Darling announced a review of the Government's fiscal rules last month after net borrowing hit £24.4 billion in the first quarter of the financial year.

In July, traditionally a strong month for tax receipts, the public sector paid back a net £4.8bn – exceeding City expectations – but the figure was lower than last year's £6.4bn, according to the Office for National Statistics.

Overall net borrowing stood at £19.1bn between April and July – £10.7bn more than in the same period last year.

The statistics come on the day figures showed mortgage lending increased slightly during July but remained well down on the level recorded a year ago.

A total of £24.8bn was advanced during the month, five per cent more than during June and the highest figure since April, according to the Council of Mortgage Lenders.

But lending volumes were still 27 per cent lower than they were in July 2007 as the combination of the credit crunch and house price falls continued to take their toll.