UK borrowing falls in April but Osborne misses full-year target

The Office for National Statistics said public sector net borrowing excluding banks dropped by £0.3 billion to £7.2bn in April, compared with the same month last year.

But in a blow to the Chancellor, the ONS said public sector net borrowing excluding banks for the complete financial year ending in March was £76bn - £2bn higher than its previous estimate.

The Office for Budget Responsibility had forecast borrowing to hit £72.2bn for 2015/16, meaning the Chancellor has overshot his borrowing target by £3.8bn.

The ONS said public sector net debt excluding banks rose by £49.6bn to £1,596bn in April compared with 2015 - equivalent to 83.3% of gross domestic product (GDP).

Last month’s figures provide a dismal start to the new financial year for Mr Osborne after economists pencilled in borrowing to fall to £6.4bn in April.

The worse-than-expected results come despite Government tax receipts hitting £55.9bn last month, up 2.7% compared with April 2015, as it was boosted by rises in VAT receipts, income tax, stamp duty and National Insurance contributions.

However, corporation tax dropped by 5.1% to £0.3bn over the period, according to the official figures.

The ONS said the fall in borrowing was triggered in the main by a £0.7bn drop in local government borrowing, offset by a £0.5bn jump in central government net borrowing.

A Treasury spokesman said: “Today’s figures show further progress in fixing the record post-war deficit we inherited: borrowing is falling and we have the lowest April monthly deficit since the great recession.

“But the fiscal repair job is not finished and it would be dangerous to put this at risk.”