Official figures show that UK government borrowing tumbled by more than expected in July, boosted by its banking sector levy and improving local government finances.
Public sector net borrowing - the government's preferred measure of the public finances - slid to just £20m in July, the Office for National Statistics (ONS) said.
The figure, which excludes the effects of financial interventions, compared with net borrowing of £3.5 billion in July 2010. Market expectations had been for borrowing of about £2.5 billion.
The banking sector levy raised around £660m in the month, while the public purse was also boosted by higher corporation tax and VAT revenues.
Britain's Conservative-Liberal Democrat coalition government introduced the levy earlier this year in a major austerity plan aimed at slashing a record public deficit inherited from the previous Labour administration.
Tax receipts jumped 5.6% last month to £52.3 billion after the British government raised VAT to 20% at the start of the year. Corporation tax receipts increased by £1 billion to £8.6 billion in July, while local government expenditure moved into a surplus of £1.1 billion.
A Treasury spokesman said the official data continued to show 'deficit reduction taking effect with the public finances in balance in July'. But he added that the government needed to stick to its cost-cutting plans amid ongoing turmoil on global financial markets over soaring sovereign debt in the United States and in the euro zone.
