Budget boost as borrowing falls to 11-year low

Government borrowing fell to its lowest level for 11 years last month in a timely boost for Chancellor Philip Hammond ahead of his Budget.

The state took on an extra £4.1 billion of debt in September, down from the £4.9 billion borrowed in the same month last year and the smallest figure for the month since 2007.

The latest official data from the Office for National Statistics says public borrowing in the year to date has totalled £19.9 billion, some £10.7 billion less than the same period in 2017 and the lowest for the period since 2002.

The public finances have been helped by a solid 4.4 per cent increase in tax receipts in the current financial year, in part because of higher employment and improved growth since spring.

Howard Archer, chief economic advisor to forecasters the EY ITEM Club, said: “The Chancellor will be heartened by the 2018/19 fiscal year performance so far. It does give him some much-needed room for manoeuvre in October’s budget as he looks to find the extra funding needed for the high-profile increased spending promised for the NHS.”

However, economists said Mr Hammond’s “wiggle room” for meeting the Prime Minister’s pledge to end austerity with a giveaway Budget remained limited by Brexit chaos and already announced spending measures.

These include increased NHS spending, scrapping the cap on council borrowing for new house-building, and maintaining the freeze on fuel duty.