Government borrows lowest amount in a decade

The Office for National Statistics said public sector net borrowing, excluding state-owned banks, fell by £300 million to a lower-than-expected £6.7 billion in May, in contrast to the same month last year.

It was the lowest borrowing level for the month since 2007, and came in below forecasts of £7.5bn.

Chancellor Philip Hammond faces an increasingly tough challenge to balance the books as rising inflation is predicted to hamper consumer spending, slowing the economy.

The ONS also revealed a brighter picture for net borrowing for the financial year to date, which came in at its smallest amount since 2008.

The ONS said the budget deficit for the period from April to May this year fell by £100m to £16.1bn compared with last year.

The Office for Budget Responsibility (OBR), Britain’s fiscal referee, expects the Government to record a deficit of £58.3bn for the financial year to March 2018.

Among her election pledges, Prime Minister Theresa May vowed to deliver a balanced budget by the ‘’middle of the next decade’’, knocking back Mr Hammond’s previous target of putting the public finances back in the black by 2020.