UK Chancellor George Osborne's deficit-calming efforts have been helped by a near £1.3 billion sterling drop in government borrowing in August.

UK public sector net borrowing stripping out the distorting effects of bank bailouts fell to £13.2 billion in the month from £14.4 billion a year earlier - broadly in line with economists' expectations.

The Office for National Statistics (ONS) also revised underlying borrowing for the 2012/13 financial year lower to £115.7 billion, down from an earlier estimate of £116.5 billion.

The independent Office for Budget Responsibility, set up to monitor the UK's finances, expects underlying public sector net borrowing to rise in the latest financial year to about £120 billion.

The deficit in August was nursed lower by a £1.2 billion drop in central government borrowing to £12.7 billion. Local government borrowing edged up by around £200m to £1.1 billion.

The figures show that corporation tax receipts were slightly higher at £1.3 billion, but income tax receipts fell to £10.5 billion from £11.1 billion.

Economists said the figures may show the improving economy is starting to filter through to reduce the state's borrowing needs.

The British economy expanded by 0.7% in the April to June quarter and the Bank of England recently revealed it expects growth of the same amount in the third quarter, as Britain's economic recovery picks up.

Unlike previous months, the August borrowing figures were not distorted by multibillion-pound transfers of quantitative easing cash or Royal Mail pension assets.

July's data released last month contained a surprise rise in borrowing - compared with a normal surplus - and today's revised figures showed this deteriorated further to underlying borrowing of £688m.

The ONS said VAT sales tax receipts edged up to £9.2 billion from £9 billion in August, while there was also a pick-up in stamp duty receipts from home sales, but added there were no other discernible effects on the tax coffers from the improving economy.