Stronger tax receipts and a fall in departmental spending helped Chancellor George Osborne meet the Government’s full-year borrowing target, confounding expectations, which were for a deficit of £11bn.
The Government borrowed £107.7bn in the 2013-14 financial year, lower than the £115.1bn it borrowed the year before, while underlying borrowing, excluding financial interventions such as cash transfers from the Bank of England’s £375bn of asset purchases, fell to £6.7bn in March, down from £11.4bn in the same month last year.
The figures show that the deficit is now at its lowest level since the financial crisis, when borrowing hit £157.3bn in 2009-10. However, it remains well above 2007-08 levels, when the Government borrowed £38bn. Meanwhile, downward revisions over the next five years mean the Chancellor is on track to borrow £24bn less than forecast in December.
According to the Office for National Statistics (ONS), which published the data, income tax receipts increased by 7.8 per cent to £13.8bn in March, while revenues from stamp duty jumped to £1.1bn, a 44.5 per cent increase year-on-year. On an annual basis, stamp duty receipts rose to £12.6bn, a 37.2 per cent rise on the previous financial year.
The figures from the ONS have been hailed as proof that the Government’s austerity programme is working, albeit slowly, but the consensus is that bringing down the deficit remains a difficult task.
Meanwhile, the Office for Budget Responsibility (OBR) has forecast a declining deficit in every year of its forecast horizon, with borrowing falling to £95.5bn in 2014-15 before achieving a surplus of £4.8bn in 2018-19.
There was further good news for the Chancellor following the April meeting of the Bank of England’s Monetary Policy Committee, when all nine members thought it was “possible” that a sustainable recovery and real wage rises were on the way. They subsequently all voted in favour of leaving interest rates on hold at 0.5 per cent and quantitative easing unchanged at £375bn.