UK budget deficit narrows as shoppers boost VAT receipts

Public finances still rising as a proportion of GDP despite unexpectedly strong figures for August

Britain's public sector spending deficit dropped to its lowest August total since 2007 after an increase in VAT revenues and a squeeze on local authority borrowing.

The deficit in August stood at 5.7bn, down 18% compared with the same month last year, beating forecasts of 7.1bn in a Reuters poll of economists.

Related: UK public finances beat forecasts, as Ryanair boss apologises over cancellations - business live