The chancellor has been urged to cut taxes, after new data showed borrowing costs had fallen.
But the government is still in danger of missing its fiscal targets, despite rising tax receipts and a lower than expected debt interest bill.
Martin Beck, economic adviser to the EY Item Club, said the Office for Budget Responsibility was likely to warn that the chancellor will not meet his target to have debt on a declining path in the next five years or to balance day-to-day spending.
Official figures showed that public sector net borrowing was £4.3bn in July, less than the £6bn estimated by the OBR. Private sector economists expected the bill to hit £4.9bn.
The ONS said the government received £65.6bn in taxes last month, nearly £4bn higher than a year earlier, with income tax, corporation tax and VAT receipts all on the rise.
Tory MPs have renewed calls on Jeremy Hunt to cut business and personal taxes.
