Osborne Faces Shaky Start On Public Finances

George Osborne suffered a shaky start to the new financial year as official figures showed public sector borrowing was higher than expected last month.

Borrowing - excluding the effect of bank bailouts - came in at £7.2bn in April, according to the Office for National Statistics (ONS).

It (Other OTC: ITGL - news) was 4% or £300m lower than for the same month a year ago, but the narrowing was not as quick as expected. Economists had expected a figure of £6.6bn.

Treasury coffers were boosted in April by a record take of stamp duty on land and property but receipts from corporation tax were down compared to last year - chiming with signs that the UK economy is undergoing a growth slowdown.

It is only the first month of the April-March fiscal year but should the reduction in borrowing continue at the same pace, the Treasury would overshoot the Office for Budget Responsibility (OBR)'s deficit target of £55.5bn for 2016/17 by about £14bn.

Figures last month had already shown that the Chancellor missed the OBR target for 2015/16.

The new data revised the 2015/16 annual picture to show that borrowing was in fact £2bn higher than thought - at £76bn - thanks to weaker than expected national insurance contributions, meaning the miss was even greater.

Investec called April's figures "(perhaps) a shaky start to the year for the public finances". Investec (LSE: INVP.L - news) economist Philip Shaw said: "It is too early to determine the path of fiscal trends with any confidence simply by looking at today's data.

"There does seem to be a growing risk however that progress in reducing the deficit is stalling."

Scotiabank's Alan Clarke said: "To hit the Chancellor's borrowing goal for this year we needed to see borrowing down by an average of £1.5bn per month compared with the same month a year ago so we are running behind schedule already."