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UK government borrowing falls to £1.1bn in July, despite third-highest year-to-date deficit on record – business live

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Introduction: UK government borrowing falls to £1.1bn in July, despite third-highest year-to-date deficit on record

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

The UK government borrowed £1.1bn last month, the lowest July borrowing for three years, in a boost to the chancellor ahead of her autumn budget.

The figure was £2.3bn lower than a year earlier, the Office for National Statistics said. It was also below economists’ forecasts.

Income tax receipts via self assessment totalled £15.5bn, £2.7bn more than in July 2024.

So far this financial year, from April to July, borrowing totalled £60bn, £6.7bn higher than in the same period last year, and the third-highest borrowing for the period since records began, after those of 2020 and 2021. It is in line with the Office for Budget Responsibility’s forecast of £59.9bn for that period.

Darren JonesChief Secretary to the Treasury, said:

We’re investing in our public services, and modernising the state, to improve outcomes and reduce costs in the medium term.

Far too much taxpayer money is spent on interest payments for the longstanding national debt. That’s why we’re driving down government borrowing over the course of the parliament – so working people don’t have to foot the bill and we can invest in better schools, hospitals, and services for working families.

Commenting on today’s public sector finances figures for July 2025, ONS Deputy Director for Public Sector Finances Rob Doody said: (quote 1 of 2) pic.twitter.com/tIS49p7PAA

— Office for National Statistics (ONS) (@ONS) August 21, 2025

Many Asian stock markets have made modest gains, while Japan’s Nikkei fell by 0.6% and Hong Kong’s Hang Seng slipped 0.3%. On Wall Street, the tech-heavy Nasdaq closed lower again, by 0.7% while the S&P 500 fell by 0.2% and the Dow Jones was flat.

The minutes of the last US Federal Reserve meeting last night showed two governors backed a cut. Policymakers on the federal open market committee (FOMC) worried about the state of the labour market and elevated inflation, but most agreed that it was too soon to cut interest rates.

Ipek Ozkardeskayasenior analyst at Swissquote Bank, said:

Yesterday’s FOMC minutes further dampened investor mood and accelerated the equity selloff – again led by a significant drop across Big Tech. The minutes stated that Fed officials were worried about both weakening jobs data and inflation risks, but that “a majority of participants judged the upside risks to inflation as the greater of these two risks.” That means officials remain inclined to prioritise inflation control by keeping monetary policy tight rather than cutting rates.

Yet, one caveat makes the minutes look less hawkish than they first appeared: this meeting was held before the release of the problematic July jobs report – with big downside revisions – that spooked investors and fueled expectations for a September cut. Jerome Powell’s speech tomorrow could therefore strike a middle ground: acknowledging rising concern about the labour market, while underscoring that inflation remains a key risk to be addressed carefully.

The Agenda

  • Jackson Hole Symposium in Kansas

  • 8.15am BST: France HCOB PMIs flash for August

  • 8.30am BST: Germany HCOB PMIs flash for August

  • 9am BST: Eurozone HCOB PMIs flash for August

  • 9.30am BST: UK S&P Global PMIs flash for August

  • 1.30pm BST: US Initial jobless claims for week of 16 August

  • 3pm BST: US Home sales for July

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