Government borrowing was lower than expected last month, adding to speculation about possible tax cuts later this year.

Borrowing - the difference between spending and tax income - was £4.3bn in July, official figures show, below analysts' forecasts of about £5bn.

The figure was helped by rising self assessment tax revenues, but debt interest payments hit a July record, the BBC reported.

Analysts warned that Chancellor Jeremy Hunt still had little "wiggle room" for tax cuts.

There has been speculation that the government could announce cuts in the Autumn Statement, with a general election expected in 2024.

Borrowing for the financial year to date has now reached £56.6bn, according to the Office for National Statistics (ONS).

While that is higher than in the same four-month period last year, it is still £11.3bn lower than the amount predicted in March by the government's independent forecaster, the Office for Budget Responsibility (OBR).

Despite the better-than-expected figures, the BBC reported that Ruth Gregory, deputy chief UK economist at Capital Economics, said that she thought the Chancellor Jeremy Hunt would "struggle to unveil a large package of permanent tax cuts in the Autumn Statement".

This was because the economy was expected to weaken later this year, which would hit tax revenues.