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UK borrows less than forecast in first month of fiscal year

The data also showed the deficit in the latest fiscal year narrowed to £40.5 billion

Gulf News

London: Chancellor of the Exchequer Philip Hammond received a boost on Tuesday as figures showed Britain borrowed less than predicted in the first month of the new fiscal year.

Spending exceeded revenue by £7.8 billion (Dh38.5 billion; $10.5 billion) in April, the smallest deficit for the month since 2008, the Office for National Statistics said. A shortfall of £8.5 billion was forecast by economists in a Bloomberg survey.

The data also showed the deficit in the latest fiscal year narrowed to £40.5 billion, the lowest level since before the financial crisis and £2.1 billion less than previously estimated. It left borrowing as a share of GDP at a 16-year low of 2 per cent.

Hammond is hoping to bring down the deficit to 1.8 per cent of GDP in the current fiscal year, and balance the books altogether by the middle of the next decade. Revisions to tax and spending in 2017-18 left the deficit well below the £45.2 billion forecast by the Office for Budget Responsibility in March.

But there are doubts over whether he can deliver his goal, with Brexit muddying the economic outlook and pressure mounting to ease the strain on public spending after almost a decade of austerity.

Tax receipts rose 1 per cent in April from a year earlier, with record employment helping boost income-tax revenue by 12.3 per cent. Value-added tax, a levy on sales, rose 2.8 per cent. There was also a modest £13 million boost from a new tax on sugary drinks.

Spending barely rose as slowing inflation brought down debt-servicing costs on government bonds.

The cash measure used to calculate how much the Treasury needs to borrow in the markets was in surplus by £6.1 billion. Revenue was boosted by the £1.4 billion sale of 4G and 5G mobile spectrum. Net debt fell to 75.8 per cent of GDP from 76.3 per cent in March.

— Bloomberg

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