The UK budget deficit narrowed in June as the economy started to recover, yet the borrowing was the second-highest on record for the month, the Office for National Statistics said on Wednesday.

The public sector net borrowing decreased GBP 5.5 billion from the last year to GBP 22.8 billion in June and was below the Office for Budget Responsibility’s forecast of GBP 25.2 billion.

Nonetheless, this was the second-highest June borrowing since monthly records began in 1993 and exceeded the economists’ forecast of GBP 21.5 billion.

In June, central government receipts grew 18 percent annually, while the expenditure rose only 3.1 percent.

Interest payments on central government debt came in at GBP 8.7 billion in June, which was the highest monthly payment on record.

In the financial year-to-June period, public sector net borrowing decreased by GBP 49.8 billion from the last year to GBP 69.5 billion. But this was the second-highest financial year-to-June borrowing since monthly records began in 1993, the ONS said.

Official forecasts suggested that borrowing may reach GBP 233.9 billion by the end of the financial year ending March 2022.

At the end of June, public sector net debt, excluding public sector banks was GBP 2,218.2 billion or around 99.7 percent of GDP, the highest ratio since the 102.5 percent recorded in March 1961.

While debt service costs will probably stay higher than the Office for Budget Responsibility estimated over next few years, the public finances should continue to reap the benefits of a faster and fuller recovery in GDP than the OBR expects, meaning that the deficit should still fall faster, Ruth Gregory, an economist at Capital Economics, said.

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