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UK government borrowing falls to 10-year-low

22nd May 18 12:50 pm

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UK government kicked-off the new fiscal year by borrowing the lowest net amount for April in a decade, according to latest data from the Office for National Statistics (ONS). The deficit in April stood at £7.840bn, compared with £8.953bn a year ago.

The ONS also cut its estimate for the deficit over the entire 2017/18 financial year, excluding public sector banks, by £2.1bn to £40.487bn. The deficit for 2017/18 now stands at 2.0 per cent of gross domestic product — the smallest budget deficit as a share of GDP since 2001/02.

“Chancellor Philip Hammond will be heartened by the healthy start to the fiscal year following better-than-expected public finances,” said Howard Archer, chief economic adviser at EY ITEM Club.

“However, the Chancellor is unlikely to make any significant decisions on fiscal policy ahead of the November budget. There have been some hints from Hammond that he could lift public spending in the next budget, particularly on health.

“However, Liz Truss, the chief secretary to the Treasury has recently stated that there will be no further rises in public spending unless the UK economy grows faster than official projections and boosts revenues.”

“April’s public finances figures have got the new fiscal year off to a good start and suggest that the Chancellor might have more elbow room to loosen the purse strings in the Autumn Budget,” said Ruth Gregory of Capital Economics.

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