With the economy proving to be more resilient than expected following Brexit, UK government borrowing has fallen to the lowest level since the financial crisis.
Borrowing fell to £52 billion in the 2016-17 financial year, down by £20 billion. The office for Budget Responsibility forecast the deficit would be slightly lower at £51.7 billion.
The decrease in government borrowing means the gap between what the government spends and earns has narrowed.
Good news for Chancellor Philip Hammond as the UK’s public finances come within close to hitting the full-year target as the Government prepares for the snap General Election called by Theresa May.
“This is helpful for the chancellor’s and government’s credibility, which is all the more welcome given the looming snap general election,” said chief UK economist at IHS Markit, Howard Archer.
“Philip Hammond is clearly keen to keep fiscal ammunition up his sleeve – due to the major uncertainties and downside risks that the economy faces as it navigates its way out of the EU.”
John Hawksworth, the chief economist at PwC said: “It is good news that the deficit is coming down, but it is too soon to be complacent about the state of the public finances.
“As the OBR said last month, a number of one-off factors relating to the timing of tax receipts and spending flattered the deficit figures for 2016/17 but are likely to be reversed in 2017/18.
“Higher inflation will also act as a drag on growth over the next year while boosting some benefit payments that are linked to prices.
“So the improvement in the deficit could well be reversed in the coming financial year as the OBR predicted.”
Official figures show the deficit in the eurozone was at 1.4 percent of annual GDP in 2016’s fourth quarter, down from 1.6 percent in the previous quarter.