Surprise July borrowing deficit deals new blow to govt

Britain unexpectedly added to its public sector debt pile in July, official data revealed Tuesday, dealing a blow to the government's hopes of reducing the deficit. Public sector net borrowing stood at £600 million ($946 million, 763 million euros) in July compared with a net repayment of £2.8 billion in the same month one year earlier, the Office for National Statistics said in a statement. Analysts had forecast a July net repayment of £2.5 billion, according to a poll by Dow Jones Newswires. July tends to be a surplus month as it sees the Treasury receive a large slice of owed tax receipts. Explaining the surprise data, a Treasury spokesman said: "Tax receipts are coming in below forecast but this is mostly explained by the weakness in corporation tax, especially from North Sea oil production." He added: "The government remains committed to the credible plan we have set out to deal with Britain's debts." The official data excludes the temporary effects of financial interventions such as bank bailouts.