State borrowing halves as UK economy rebounds with £9.5billion higher tax haul compared to July last year while state spending falls by £2.9billion

State borrowing halved last month as the economic rebound boosted tax receipts and cut furlough payments.

The Government borrowed £10.4billion in July – down from £20.5billion in the same month last year, the Office for National Statistics said.

Economic activity was driven up by the lifting of Covid rules, which led to a £9.5billion higher tax haul than last July. 

At the same time, state spending fell by £2.9billion, largely because furlough schemes are ending, said the ONS.

However, it was still the second highest borrowing figure for July on record behind last year. 

Chancellor Rishi Sunak said: ‘Our recovery from the pandemic is well under way, boosted by the huge amount of support Government has provided'

And in a sign of the damage caused by the coronavirus crisis, the national debt stands at more than £2.2trillion – or £88,000 per household. 

The debt burden is now the equivalent of 98.8 per cent of economic output in the UK – the highest since March 1962 when it was 99.5 per cent.

Chancellor Rishi Sunak said: ‘Our recovery from the pandemic is well under way, boosted by the huge amount of support Government has provided. 

'But the last 18 months have had a huge impact on our economy and public finances, and many risks remain.’

Britain has now borrowed £78billion in the first four months of the fiscal year.

This is down from £140billion in the same period last year but it remains uncomfortably high for the Chancellor ahead of his three-year spending review this autumn.