Osborne misses target on borrowing by £1.8bn

The Office for National Statistics said the budget deficit stood at £74 billion for the financial year ending in March.

The Office for Budget Responsibility had forecast borrowing to hit £72.2 billion for 2015/16, meaning the Chancellor overshot his borrowing target by £1.8 billion.

The ONS said borrowing hit a better-than-expected £4.6 billion in March, falling £2.6 billion year-on-year.

It added that the Government saved £1.3 billion on the cost of “day-to-day” activities of the public sector, but spent £6.1 billion on infrastructure.

Public sector net debt excluding public sector banks increased by £47.5 billion year-on-year to £1,594.1 billion to the end of March, the equivalent to 83.5% of gross domestic product.

But while Mr Osborne missed his target for the year, he still managed to drive down borrowing by £17.7 billion year-on-year to £74 billion.

Mr Osborne has pledged to return the UK to a surplus by 2020, with the OBR forecast stating that the UK would have a budget surplus of £10.4 billion in 2019/20 and £11 billion the year after.

However, the Chancellor is now expected to see the deficit shrink more slowly than previously thought, with the OBR expecting it to reach £55.5 billion in 2016/17, £38.8 billion in 2017/18 and £21.4 billion in 2018/19.

In a hearing with MPs on the Treasury Select Committee following the Budget, OBR chairman Robert Chote said there was still a 55% chance that Mr Osborne would hit his surplus target despite making a U-turn on disability payment cuts.

The ONS said central government received £636.2 billion in income for the financial year to March, up 4% on 2015, as it raked more money from taxes.

But it said the Government spent £696.2 billion - around the same as the year before - with two-thirds being used for central government departments, a third on social benefits including pensions, unemployment payments, child benefit and maternity pay, and the rest on capital investment and the interest on the Government’s outstanding debt.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said weak growth from tax receipts in the middle of last year was the reason the Chancellor missed his borrowing target.

He added: “Nonetheless, the risk of a much bigger overshoot this year has grown as the economy has slowed.