UK government public borrowing falls to 17-year low but misses Hammond’s spring statement target
Public borrowing fell to its lowest level for 17 years in 2017-18 but was still higher than predicted, according to data published today.
Borrowing hit £24.7bn between April 2018 and March 2019, the Office for National Statistics (ONS) revealed today, £17.2bn less than the previous financial year.
Read more: Government borrowing falls to 17-year low
However, borrowing still exceeded expectations set by the Office of Budget Responsibility (OBR) by £1.9bn last year.
Meanwhile borrowing last month hit £1.7bn, almost £1bn more than March 2018, which was a 12-year low.
Public sector net debt at the end of March grew by £22.1bn year on year to £1.8 trillion excluding public sector banks.
However, debt at the end of the latest financial year stood £2bn lower than the OBR’s forecast of £1.8 trillion, equivalent to a drop of 0.2 percentage points of GDP.
Economists branded the figures “modestly disappointing” as chancellor Philip Hammond narrowly missed his Spring Statement target of £22.8bn of borrowing.
“In the overall scheme of things, the modest miss … is hardly the end of the world for the chancellor,” said Howard Archer, chief economic adviser to the EY Item Club.
“It is also notable that in the budget for 2018/19 held in November 2017, the budget deficit had been seen at £39.5bn. The actual outturn of £24.7bn was 37.5 per cent lower than originally expected.”
Central government receipts rose five per cent year on year, but corporation tax dropped 2.6 per cent while income and capital gains tax grew 6.4 per cent.
Research group Capital Economics said the low borrowing level “gives the chancellor ample room to loosen policy in the autumn Budget if he wishes and if there’s a Brexit deal or a no deal”.
Read more: Government borrowing falls to fresh 17-year low
Economist Andrew Wishart added: “The big picture, though, is that borrowing is now low enough for whoever is in office to set fiscal policy according to economic or political aims as opposed to the overriding objective of reducing the deficit.
“While our forecast is for the deficit to fall to zero in around 2021-22, now that there isn’t a pressing need to reduce the deficit further, we wouldn’t be surprised to see a further loosening in fiscal policy ahead.”