Bumper tax revenues from North Sea oil helped Britain's public finances swing into surplus in July, data showed today, but the government still faces an uphill battle to meet its full-year borrowing forecasts.
The Office for National Statistics said the public sector posted a net cash repayment of £12.6 billion last month, more than the £10 billion repayment forecast by analysts but less than the £13.3 billion repaid in July 2007.
The government's preferred accruals-based measure - which is less volatile than the cash measure - showed a surplus of £4.8 billion, slightly higher than the £4.3 billion forecast.
July is traditionally a surplus month due to the timing of corporate tax receipts.
Government borrowing in the first quarter of the financial year was the highest in any quarter since records began in 1946 and analysts said July's figures did not change the deteriorating trend.
"The public finance figures do nothing to alter the broad concern that the government, on a medium-term view, is suffering considerable fiscal slippage," said Richard Mcguire, a strategist at RBC Capital Markets.
About £4 billion of July's £9.9 billion of corporation tax was from North Sea companies, more than twice as much as in July 2007. However, corporation tax from onshore companies was lower than last year when receipts were boosted by the setting up of real estate investment trusts.
Government borrowing for the first four months of the financial year is running at £19.1 billion, £10.7 billion higher than the same period last year.
The government has a full-year borrowing target of £43 billion but many analysts reckon the figure could be closer to £50 billion as a slowing economy erodes tax receipts and boosts social security spending.
Public sector net debt was 37.3 per cent of GDP, up from 36.1 per cent in July 2007.