UK public sector borrowing fell to £3.8bn in July, down from £6.1bn in July 2009, suggesting the nation's finances are starting to recover.
Borrowing so far this financial year (between April and July) is £44.9bn, down from £47.5bn in the same period last year, according to the Office for National Statistics.
At the end of July, net debt stood at £816.2bn, or 56.1% of GDP. This compares to net debt of £665.1bn in July last year, which was 47.7% of GDP.
The public sector budget deficit was £500m, or £3.3bn lower than in July last wear.
The Government's borrowing forecast is £149bn for 2010-11, down from the £155bn it borrowed the previous year.
World First chief economist Jeremy Cook says the figures will be welcome news for the Government.
"This will come as a boost to the coalition Government, although July is a month in which quarterly payments of corporation tax are due and therefore the figures are somewhat skewed. While the debt position in the UK is still massive, this goes some way to rectifying this."
Meanwhile, UK retail sales beat expectations, posting a 1.1% rise against a consensus forecast of a 0.4% increase. This was the highest month on month increase since February, and a positive sign for the high street, which saw sales boosted across a wide spectrum of retailers.
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