UK budget deficit falls in June but experts say tax cuts are unlikely

Jeremy Hunt pointed to the fall in inflation as a sign the UK economy is stabilising. Photograph: Aaron Chown/PA

The UK’s spending deficit fell unexpectedly last month, helped by higher income tax revenues on the back of a flurry of wage rises earlier in the year and a jump in VAT receipts.

The public finances were £18.5bn in the red in June, £400m below the same month last year and below the £22bn shortfall the City had forecast, the Office for National Statistics said.