Stronger tax receipts reduced Britain’s borrowing bill in March, helping the Government to comfortably undershoot its annual borrowing target in a pre-election boost for Chancellor George Osborne, reports The Telegraph.
The Government borrowed £7.4bn last month to plug the gap between spending and revenues. This was £0.4bn lower than in March 2014, according to the Office for National Statistics (ONS).
This means the budget deficit for the 2014-15 fiscal year was £87.3bn, more than £11bn lower than last year’s deficit and under the Office for Budget Responsibility’s (OBR’s) forecast of £90.2bn at the Budget.
The figures were released ahead of a warning by a leading think-tank that Labour would leave Britain saddled with an extra £90bn of debt if it wins the general election.
The Institute for Fiscal Studies (IFS) warned that Britain’s deficit – at 5 per cent of gross domestic product (GDP) – was “unsustainable”, calculating that a Labour government would still be borrowing 1.4 per cent of GDP – £26bn in today’s money, by the end of the decade, which would push Britain’s debt pile up by £90bn.
Its analysis showed that under the Tories, Britain’s national debt is likely to fall from 80.4 per cent of GDP to 72 per cent over the course of the next parliament, while Labour is likely to reduce debt to 77 per cent.
“Higher debt entails higher debt interest payments, and would potentially leave the government less well placed to deal with future adverse events,” the IFS said in its manifesto analysis.
The ONS said stronger tax receipts and lower debt interest costs contributed to the decline in borrowing last month. Revenues from income tax rose by 4.9pc compared with a year earlier to £15.5bn, while corporation tax payments rose 28.6 per cent to £1.9bn. Only stamp duties revenues fell, which reflected the cooling housing market.
