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Government deficit is lowest for 17 years

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The Office of National Statistics (ONS) has said government borrowing for 2018 dropped to its lowest annual level in 17-years.

The ONS said, borrowing for 2018 to 2019 financial years was £24.7bn, £17.2bn less than the previous year, although it was still higher than the forecast last month by the Office for Budget Responsibilities (OBR).

Tax receipts continued to grow strong in March although, government spending accounted for a much wider than expected deficit due to purchases of goods and services.

The chancellor of the exchequer Philip Hammond had extra spending room as borrowing in 2018 was the equivalent to 1.2%, and he wants to reduce borrowing to the equivalent of 2% of UK economic output.

UK economist of Pantheon Macroeconomics, Samuel Tombs said, “The chancellor still should be able to scrap the further austerity measures planned for 2020-21 in the Budget later this year and meet his target.”

However, the shadow chancellor John McDonnell had this to say, “So, much for the deficit being eliminated, something the Tories told us they would achieve by 2015.

“Four years on and the government has added another £1.7bn to the deficit in March alone.

“Nine hard years of austerity have held down growth, and shifted deficits onto the shoulders of local councillors, NHS managers, and head teachers.”

John Hawksworth, PwC chief economist gave a more optimistic response he said, “While there are many political and economic uncertainties ahead, the fact that the public finances are in their best shape for 17-years should give some room for maneuver in his Autumn Budget and Spending Review.”




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