Public sector net borrowing shrunk to £10.4 billion in July 2021, down from the £20.4bn borrowed this time last year, data from the Office for National Statistics (ONS) shows.
The figure is still the second highest for July on record, larger by £11.4bn than the amount recorded in July 2019.
Excluding the £1.7bn borrowed in January, the difference between Government income and spending in July was the lowest yet in 2021, down from the £21.5bn borrowed in June.
The large amount of money borrowed over the past year to finance support such as the furlough scheme and COVID-19 business loans has now pushed the total UK debt to more than £2.2 trillion, about 98.8% of GDP.
The ONS now estimates that the Government borrowed a total of £298bn in the financial year to March, amounting to 14.2% of GDP.
Ruth Gregory, senior UK economist at Capital Economics, said July's borrowing figure was "once again comfortably lower" than the forecast by the Office for Budget Responsibility.
"Total tax receipts of £70bn in July were above June's £62.1bn and last July's total of £60.6bn, another encouraging sign that the economic recovery is feeding through to the public coffers."
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