Business

UK government hits borrowing target in 2013-14

George Osborne Image copyright PA
Image caption George Osborne was helped by a reduced March shortfall

The UK government borrowed £107.7bn in the financial year to April 2014, lower than the £115.1bn amount it borrowed the previous year.

In the Budget, the Office for Budget Responsibility (OBR) had estimated a deficit for the full year of £107.8bn.

The government wants to eliminate the budget deficit by 2017-18.

Borrowing in March fell to £6.7bn from £11.4bn a year earlier, excluding financial interventions, the Office for National Statistics (ONS) said.

'Psychological boost'

Meanwhile, the figure for February was revised down from £9.3bn to £8.8bn.

The annual figure is the first provisional estimate of the financial year, and will be revised as more data becomes available.

It excludes the effects of both the transfer of the Royal Mail pension scheme to the government, and gains from the Bank of England's asset purchases for quantitative easing (QE).

The UK's public sector net debt, excluding financial interventions, is now £1,268.7bn, equivalent to 75.8% of GDP. This compares with a figure of £1,185.2bn, or 74.2% of GDP, at the end of March 2013.

£1,185.2 billion (74.2% of GDP) at the end of March 2013.

The OBR has forecast that the ratio will peak at close to 79% in 2015-16.

BBC chief economics correspondent Hugh Pym says tax receipts for March look more robust than most analysts had expected.

He adds that the latest borrowing figure could yet be revised, but right now it looks better than it might have been for the Chancellor, George Osborne.

Howard Archer, chief economist at analysts Global Insight, said Mr Osborne had been "helped enormously by the March shortfall being limited to £6.7bn".

"While in reality, it made little difference whether the chancellor just hit or just missed his fiscal target for 2013-14, the fact that he did make it provides a psychological boost for the government and it may support belief that he can hit his longer-term targets," said Mr Archer.

"Nevertheless, a deficit of £107.7bn in 2013-14 highlights the fact that here is still an awfully long way to go in getting the public finances into decent shape."

'Difficult task'

David Kern, chief economist at the British Chambers of Commerce (BCC), said the figures showed that gradual progress has been made over the past year in stabilising public finances.

"However, bringing down our budget deficit remains a difficult task. Since the financial crisis, we have seen falls in oil and gas output and weaknesses in the financial sector," he added.

"These structural changes have reduced the country's ability to generate tax revenues, and future public spending must factor in these challenges.

"Although progress may be gradual, reducing our public sector debt is necessary, as it will help businesses drive the recovery, and create jobs and wealth."

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