The most recent official figures show that UK government borrowing fell in April to a level of £6.8 billion. This is a significant year-on-year drop, with the figure standing at £9.3 billion in April 2014.
This year’s is therefore the lowest April level of government borrowing since 2008. In April of that year, the total amount of borrowing by the government stood at £2.5 billion.
Estimates of the total amount of government borrowing over the financial year have been revised upwards by the Office for National Statistics (ONS). Previously, the ONS estimated £87.3 billion of total borrowing but now this figure has been increased to an estimate of £87.7 billion over the whole financial year. However, this still remains noticeably lower than the government’s target of £90.3 billion.
Currently, it is too early in the financial year for experts to make any meaningful predictions about the specifics of what these figures could mean. Furthermore, the ONS itself has warned that borrowing figures from the earliest several months of a financial year are frequently subject to later revision. However, the apparent drop in government borrowing has been tentatively taken as a positive sign for the immediate future of the UK economy.
The UK’s economy experienced growth of 0.3% in the three months leading up to the end of March, according to official figures released last month. This compares to 0.6% growth in the previous quarter – the last three months of last year.
In the Budget that was released in March, Chancellor George Osborne forecast a total of £75.3 billion net public sector borrowing over the course of this financial year. In July, Osborne plans to hold a new budget, in which he is expected to outline his strategy for bringing down the deficit. Osborne’s strategy is expected to aim for complete elimination of the deficit before 2018, and a budgetary surplus in the 2018/2019 financial year.
It is believed that this strategy will involve significant reductions in welfare spending, with cuts in this area amounting to a total of £12 billion. Including these cuts to welfare, it is expected that government departments will face a total of £30 billion in spending cuts in order to fund the elimination of the deficit. Government borrowing targets may also be subject to revision under Osborne’s plans.
According to a spokesperson for the Treasury, the recent drop in borrowing shows that the government’s efforts are bearing fruit. “We have more than halved the deficit,” the spokesperson said, “but at just under 5%, it is still one of the highest in the developed world.”