The United Kingdom�s public finances improved last month when the government enjoyed record surpluses of income from taxation over spending for a July, official figures showed.

The United Kingdom's public finances improved last month when the government enjoyed record surpluses of income from taxation over spending for a July, official figures showed.

However, economists warned that the government's spending and borrowing plans could be thrown into doubt if the US sub-prime credit crisis leads to a slowdown in global economic growth.

The Office for National Statistics said the public sector posted a net cash repayment of £13bn in July, as strong corporation tax receipts swelled the government's coffers.

The large surplus recorded was well above forecasts for a repayment of £11bn and was the biggest repayment for the month of July since records began in 1984-85. The government's preferred accruals-based measure, which includes non-cash items, showed a surplus of £6.5bn, which was also a record for July. The consensus forecast among economists was for a surplus of £6bn.

While January, April, July and October are traditionally months in which the public finances are in the black due to the timing of tax receipts, the size of the surplus took economists by surprise.

"The figures are better than the market expected and show government borrowing is progressing in the right direction," said David Page, economist at Investec.

The figures will provide comforting reading for Alistair Darling, who took over as Chancellor of the Exchequer when Gordon Brown became Prime Minister in June.

With the economy growing strongly and the labour market booming, the figures will increase confidence that the government can meet its borrowing target of £34bn for the full financial year without changing its tax and spending policies.

Nonetheless, Paul Dales, UK economist at Capital Economics, noted that the bumper surplus followed the largest June deficit on record.

"After four months of the financial year, borrowing has totalled £10.1bn compared to the £9.2bn seen this time last year," said Dales.

"Accordingly, the fiscal targets that the new Chancellor Alistair Darling inherited are already looking demanding."

If the crisis triggered by surging default rates on sub-prime mortgages, made to people with patchy credit histories or relatively low incomes, in the US spills over into the wider economy, the targets could become much harder to achieve.

"It remains to be seen how fiscal performance might change should the present credit crisis become extended," said George Buckley, an economist at Deutsche Bank.

"At the moment at least, economic growth seems to be holding up ... but looking forward, whether the target is met on public finances depends a lot on the global economic picture," said Mark Miller at HBOS.