Figures published by the Office for National Statistics (ONS) show that government borrowing totalled £6.9 billion in December 2016. Although this figure is slightly higher than many economists had predicted, it represents a drop of £0.4 billion compared to the previous year, and could see Chancellor Philip Hammond meet the deficit target set in his Autumn Statement.
In December, the Chancellor scrapped his predecessor George Osborne’s target of eliminating the budget deficit by 2020 and instead announced an updated Charter for Budget Responsibility which sets out new fiscal rules to bring the public finances into balance. Under the new plans, the government would borrow £68 billion over the full financial year to the end of April 2017.
The ONS revised the borrowing figure for November down from £12.6 billion to £11.3 billion, and the latest figures mean that borrowing for the year is £63.8 billion, which is £10.6 billion lower than for the same period in 2015. This should help Mr Hammond meet his deficit target.
A Treasury spokesman said the government had made ‘significant progress in repairing the public finances’, reducing the deficit from 10% of Gross Domestic Product (GDP) six years ago to 4%.
However, even if the Chancellor’s Autumn Statement target is met, Britain would still have one of the largest deficits among the world’s industrialised nations at around 3.3% of economic output.