Hammond Hails £2.2bn Fall In June Borrowing

The Chancellor has said a £2.2bn drop in Government borrowing last month is evidence of the country's economic strength following the EU vote.

Philip Hammond, appointed to the role after George Osborne's fall from favour under Theresa May's premiership, was reacting to the release of the first borrowing data since taking office.

The Office for National Statistics (ONS) said public sector net borrowing, excluding public sector banks, came in at £7.8bn in June - a drop of £2.2bn on the same month in 2015.

Economists had predicted a total of £9.5bn.

It took total borrowing in the financial year to date to £25.6bn - 8% lower than in the same period last year.

But the ONS said public sector net debt, excluding banks, climbed by £47.6bn to £1.6tn - the equivalent to 84% of gross domestic product, or GDP.

Commenting on the borrowing data, Mr Hammond said: "These public finance figures highlight the underlying strength of the British economy.

:: IMF Slashes UK Growth Outlook After EU Vote

"Ahead of the referendum monthly borrowing continued to fall, with the deficit in June the lowest it has been
since 2007.

"As our economy now adjusts to reflect the referendum decision it is clear we will do so from a position of economic strength."

In the wake of his appointment Mr Hammond has already ruled out any prospect of an emergency Budget - as once threatened by his predecessor - saying his focus will be on the Autumn Statement, usually in early December.

Economists, the Bank of England and businesses have all warned of tougher times ahead following the Brexit vote though there is little evidence yet of any collapse in investment and hiring.

Mr Hammond has signalled he may take advantage of cheap borrowing costs to bolster Government investment.

:: No Rush To Cut Rates Says Bank Official

Howard Archer, chief UK and European economist at IHS Global Insight, warned the overall performance of the public finances during the first three months was already "behind schedule to meet the March budget target."

He added: "The United Kingdom's decision to leave the European Union in June's referendum poses a major threat to the public finances, with markedly reduced growth prospects set to take a toll on tax receipts in particular.

"Consequently, the government has abandoned the target of a budget surplus in 2019/20."