Hammond just misses annual budget deficit target - ONS

The Chancellor all but met his budget deficit target in the last financial year, according to official figures showing an overshoot of £300m.

The Office for National Statistics (ONS) said public sector net borrowing, excluding the effects of bank bailouts, fell by £20bn to £52bn in the year to the end of March. That was its lowest level since 2007/2008.

The Office for Budget Responsibility (OBR) had forecast a total of £51.7bn.

The missed target is not extensive given the size of the figures involved, which are often subject to revision.

The performance was aided by a more resilient economy than had been expected since the Brexit vote - with corporation tax revenues returning to pre-financial crisis levels for the first time, the ONS said.

However, the latest economic evidence suggests the effects of higher prices - a consequence of the pound's slump in value since the EU referendum - are now starting to damage consumer and business sentiment.

While employment remains historically high, wage increases are easing.

Consumer spending has been the main driver of UK economic growth since the end of the recession and ONS figures covering the first quarter of the year are expected to confirm a significant slowdown.

Chancellor Philip Hammond has extended the Government's time frame to return the public finances to surplus since taking office last July, as he attempts to keep ammunition to fight the growth slowdown and other headwinds.

The ONS figures showed he borrowed more than expected in March, with the deficit for the month standing at £5.1bn - almost £2bn more than the amount forecast by economists.

The Chancellor - bruised by a Budget u-turn on raising National Insurance contributions for the self employed - is under pressure to raise more through taxation if future borrowing goals are to be met.

Ahead of the looming General Election, the Tories have been urged to come clean in their manifesto on whether they would drop the party's so-called "tax lock" that commits it not to raise VAT, income tax or national insurance contributions.

Howard Archer, chief UK and European economist at IHS Markit, said: "Essentially meeting the revised 2016/17 fiscal target is a boost for the Chancellor's credibility after it took a knock after he swiftly and embarrassingly scrapped his March budget plans to raise national insurance contributions for the self-employed.

"Public finances over 2016/17 benefited from the resilience of the economy and a strong labour market which lifted tax receipts.

"Indeed, corporation tax receipts were at a record high of £55.7bn in 2016/17."