The current budget deficit for 2017-18 was in surplus, the first time this has happened since 2001-02
The UK’s public finances have registered their first current budget surplus in sixteen years, showing the progress made by the government on this measure of deficit repair since the last recession.
The Office for National Statistics reported on Tuesday that public borrowing was just £1.35bn in March, the final month of the 2017/18 fiscal year.
This was lower than the £3.25bn City analysts had expected and it took full year borrowing to £42.6bn.
This was below the £45.2bn forecast made by the Office for Budget Responsibility (OBR) as recently as March – and was the lowest UK total annual deficit since 2006-07, before the financial crisis.
Income tax receipts in March were a record for that month.
And when stripping out capital spending, the “current” budget deficit for 2017-18 was actually in surplus, the first time this has happened since 2001-02.
However, the previous Chancellor, George Osborne, had originally planned to reach a surplus on this measure of the deficit in 2014-15, with the delay showing the extent to which the economy and public finances have undershot hopes over the past eight years.
And an overall budget surplus, on current trends, is not expected until late in the next decade.
The better than expected performance of the public finances over the past year could provide some scope for the current Chancellor, Philip Hammond, to moderate the ongoing spending squeeze in the Autumn Budget.
But the OBR has previously cautioned that it thinks recent borrowing figures could well be revised up, which would serve to limit Mr Hammond’s room for manouevre.
And the slowdown of the economy in 2018 could to take a toll on tax receipts.
“Given the time lags involved, the apparent slowing in the economy so far in 2018 will probably have some adverse impact on the public finances in the coming months,” said Ruth Gregory of Capital Economics.
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