Soaring tax receipts helped Britain post its biggest July budget surplus on record, data showed yesterday, providing welcome relief for chancellor of the exchequer Gordon Brown after a run of disappointing figures.

The numbers were flattered, however, by one-off factors and economists said it may be too early to conclude the country's public finances are definitely on an improving track.

"The numbers had been coming in a bit worse than expected so this is certainly positive for the chancellor. But the question is, given the distortions, whether it can be sustained," said George Buckley, chief UK economist at Deutsche Bank.

Mr Brown has pledged to keep a tight lid on public spending and aims to bring net borrowing down to £36 billion (€52.8 billion) this year from nearly £39 billion in the year ended March 2006.

Official data showed the public sector posted a net cash repayment of nearly £10.5 billion in July, £2 billion higher than a year earlier and better than forecast.

The government's preferred accruals-based measure also swung sharply into the black, posting a surplus of more than £6 billion. This was nearly £4 billion higher than a year earlier.

The boon to public finances comes at an opportune time for the chancellor, who is expected to succeed Tony Blair as prime minister, perhaps as soon as next year. Mr Blair has said he will not seek a fourth term in office but has not said when he will stand down.

The Treasury was confident its target for public finances would be met. "We are meeting our strict fiscal rules and will continue to do so," said a Treasury spokesman. Net borrowing had posted a record deficit in June. - (Reuters service)