Government borrowing shrinks in July

Government borrowing fell in July compared with a year earlier as the removal of most Covid restrictions in England gave the economy a boost.

Borrowing – the difference between spending and tax income – was £10.4bn, official figures show, which was £10.1bn lower than July last year.

However, the figure was the second-highest for July since records began.

Borrowing has been hitting record levels, with billions being spent on measures such as furlough payments.

The huge amount of borrowing over the past year has now pushed government debt up to more than £2.2 trillion, or about 98.8% of GDP – a rate not seen since the early 1960s.

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The Office for National Statistics (ONS) now estimates that the government borrowed a total of £298bn in the financial year to March.

That amounted to 14.2% of GDP, the highest level since the end of World War Two.

The ONS said the cost of measures to support individuals and businesses during the pandemic meant that day-to-day spending by the government rose by £204.3bn to £942.7bn last year.

Net debt

Interest payments on central government debt were £3.4bn in July.

That was £1.1bn more than in July 2020, but far lower than the monthly record of £8.7bn in June 2021.

Risks remain

“Our recovery from the pandemic is well under way, boosted by the huge amount of support government has provided,” said Chancellor Rishi Sunak.

“But the last 18 months have had a huge impact on our economy and public finances, and many risks remain.

“We’re committed to keeping the public finances on a sustainable footing, which is why at the Budget in March I set out the steps we are taking to keep debt under control in the years to come.”

Ruth Gregory, senior UK economist at Capital Economics, pointed out that July’s borrowing figure was “once again comfortably lower” than forecast by the Office for Budget Responsibility.

“Total tax receipts of £70bn in July were above June’s £62.1bn and last July’s total of £60.6bn, another encouraging sign that the economic recovery is feeding through to the public coffers. And government spending dropped from £77.2bn in June to just £73.1bn in July,” she added.

OnlyFans to ban sexually explicit content

The subscription site OnlyFans, known for its adult content, has announced it will block sexually explicit photos and videos from 1 October.

People will still be able to post nude content on the site.

But this will need to be consistent with OnlyFans’ policies.

The announcement comes after BBC News had approached the company for a response to leaked documents concerning accounts which posted illegal content.

OnlyFans said the change had come after pressure from banking partners.

The site has grown during the pandemic and says it has 130 million users.

“In order to ensure the long-term sustainability of our platform, and continue to host an inclusive community of creators and fans, we must evolve our content guidelines,” OnlyFans said in a statement.

The London-based social media site enables its creators to post nude videos and photos and charge subscribers for tips or a monthly fee.

Creators can post a range of content from cooking to fitness videos, but it is best known for pornography.

In return for hosting the material, OnlyFans takes a 20% share of all payments.

The documents – described as “compliance manuals” – show that although illegal content itself is removed, OnlyFans lets moderators give creators multiple warnings before closing accounts.

Moderation specialists and child protection experts say this shows OnlyFans has some “tolerance” for accounts posting illegal content.

In response to the BBC’s investigation, OnlyFans said the documents are not manuals or “official guidance”, it does not tolerate violations of its terms of service, and its systems and age verification go far beyond “all relevant global safety standards and regulations”.

The site, founded in 2016 by Essex businessman Tim Stokely, has come under fire in the past after a BBC News investigation found under-18s had used fake identification to set up accounts on the site. In June, BBC News found that under-18s sold explicit videos on the site, despite it being illegal for people to share indecent images of children.

After the BBC investigation, the children’s commissioner for England said OnlyFans needed to do more to stop underage users. In response to the investigation, OnlyFans said it had closed the accounts flagged and refunded all active subscriptions.

In July, the company’s first monthly transparency report said that it deactivated 15 OnlyFans accounts after finding indecent images of children on those accounts.

M&S says recovery plan boosting sales and profits

Shares in Marks & Spencer have jumped almost 12% after the retail giant issued a surprise profits upgrade thanks to better-than-expected sales.

The chain said while there had been an element of pent-up consumer demand in recent trading, there were signs that its latest turnaround plan was working.

Meanwhile, UK retail sales saw an unexpectedly sharp fall of 2.5% between June and July, official figures showed.

The fall was partly due to weaker food sales following the end of Euro 2020.

However, while the Office for National Statistics (ONS) said sales fell last month to the lowest level since shops reopened in April, they remained 5.8% ahead of pre-pandemic levels.

‘Good recovery’

M&S said its “encouraging performance” had confirmed that its Never The Same Again transformation programme – which has aimed to cut costs and has led to several store closures – was on track.

Revenues from its food business in the 19 weeks to 14 August were up 10.8% on last year and 9.6% higher than in 2019, before the pandemic struck.

It added that its clothing and home business had seen a “good recovery”, with revenue up 92.2% from last year and down just 2.6% on 2019.

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However, it warned that there remained “substantial uncertainty as to the continued strength of consumer demand, as well as disruption in both supply chains and consequent pressures on costs and margin”.

Despite this, M&S said that – assuming there are no further Covid-related restrictions on trading – it expected full-year profits to be “above the upper end of previous guidance of £300-350m”.

The news sent shares in M&S up by more than 11% to 158.65p.

Shoppers

The latest retail sales figures from the ONS showed food store sales slipped by 1.5% in July, compared with a 3.9% rise in the previous month when they had been boosted by the Euro 2020 tournament.

Non-food stores reported a 4.4% decline in volumes, with the ONS seeing declines at second-hand goods stores and computer and telecoms equipment stores.

“Following the Euro 2020 related boost in June, retail sales fell in July to their lowest level since shops reopened in April, but still remain well above pre-pandemic levels,” said Jonathan Athow, deputy national statistician for economic statistics at the ONS.

“Food sales fell back as further lifting of hospitality restrictions meant consumers had more opportunities to spend outside retail.”

He added that heavy rainfall at the start of July had also hit fuel sales, which dipped for the first time since February.

Sales at clothing stores and household stores also fell. The ONS said the only sector to see a rise was department stores, with a 0.2% increase.

Sarah Coles, a personal finance analyst at Hargreaves Lansdown, said July was a “washout for sales”.

“While the rain came down, we didn’t see the point in getting a new wardrobe, especially with so many people holidaying in the UK this year, so clothing sales didn’t get a boost from last-minute swimwear purchases.”

She said food was also hit: “In the absence of a decent BBQ season, we gave ourselves a bit of a break from the kitchen, buying less food, and spending more in restaurants and takeaways.”

However, Retail Economics boss Richard Lim says there was some demand for new clothes “as the backlog of weddings and other larger social gatherings filled households’ calendars, giving shoppers a reason to purchase new outfits”.