Record July budget surplus for UK

Will Mr Brown fail to meet his borrowing targets?

The UK Treasury had its highest July budget surplus on record - but the figures were skewed by a string of one-off factors.

The surplus stood at £8.4bn, £4.3bn higher than at the same time last year.

Changes to the corporate tax regime for North Sea oil companies and 31 July falling on a Monday increased income to treasury coffers.

There was a surplus in government public sector borrowing, with £6.3bn being paid back on loans owed.

This is well up from the £2.7bn in net-lending a year previously.

Distortions

In his recent Budget, Chancellor Gordon Brown insisted he would meet his target of cutting the current budget deficit to £7bn and public sector net borrowing to £36bn.

But analysts said that not too much could be read into the Office for National Statistics data.

Alan Clarke of BNP Paribas said the surplus "partly offset the wider-than-expected deficit last month," but said it would be difficult for the chancellor's projection for a narrowing in the deficit this year to be met.

"The numbers had been coming in a bit worse than expected, so this is certainly positive for the Chancellor," said George Buckley, an economist with Deutsche Bank.

"But the question is, given the distortions, whether it can be sustained."

The ONS, which releases the data with the Treasury, said that concentrating on one month in isolation could be misleading.