According to the latest official data, the deficit of the United Kingdom in September was the smallest in a decade.
The Office for National Statistics unveiled that public borrowing last month was £5.9bn, lower than the £6.5bn that is expected by City of London analysts.
It was the smallest borrowing amount for a September since 2007. The deficit for August was also changed down by the ONS from £5.7bn to £4.7bn.
So far, the borrowing for the 2017-20118 financial year is £32.5, which is down £2.5bn on the same stage in 2016-2017.
The figures drive the Government on course to undershoot the £58.3bn full borrowing forecast of 2017 that is made by the Office for Budget Responsibility so at the time of the March Budget.
Lowest September borrowing in a decade
However, the OBR recently signalled that forecast productivity growth downgrades over the following five years cam possibly offset any near-term improvements in the finances of the public.
This could leave Philip Hammond, the Chancellor, without much extra scope for tax cuts or spending increases if he wants to meet his own fiscal rules when he reveals his next Budget on November 22.
“The net impact of these forecast changes is likely to be higher projected borrowing,” stated the chief economist at PwC, John Hawksworth.
“This could more than offset the likely undershoot this year, so reducing the Chancellor’s fiscal wriggle room in the Budget.”
Pantheon’s Samuel Tombs noted that lower than anticipated borrowing in 2017 primarily reflected a larger than expected squeeze on government spending, instead of significantly stronger tax receipts.
This financial year VAT receipts are up 3.7 percent. However, income and capital gains revenues are only 2.3 percent higher.
In recent weeks, the Treasury has been eager to dismiss suggestions that the public finances are improving and that space is being developed for higher public sector pay and an easing of the austerity of the public sector.
“Whilst we’ve made great progress getting the deficit down by over two-thirds, government borrowing is still far too high at over £150m a day,” stated a spokesperson as a response to the figures last Friday.
“We will continue to take a balanced approach that deals with our debts and allows us to invest in our public services.”