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United Kingdom borrowing lowest since March 2007

24 April 2018

The UK government borrowing has fallen to its lowest annual level in 11 years, the Office for National Statistics reported today.

The number of zero-hours contracts in the United Kingdom has increased to 1.8 million over the past year, new figures show. It also comfortably beat a £50 billion deficit target set in November by Finance Minister Philip Hammond.

Borrowing narrowed to 2.1% of gross domestic product (GDP) a year ago, down from 10% in 2010.

The borrowing undershoot, if it is maintained, will give the chancellor more room for spending on priority issues such as the health service and public sector pay.

The U.K. budget deficit has shrunk to its smallest level in more than 10 years.

In a tweet, Hammond reiterated a previous comment that Britain's economy was at "a turning point".

John Hawksworth, chief economist at PwC, said: "The key challenge facing the chancellor in his Budget in November will be how to trade-off growing political pressures to ease austerity against his desire to get the debt ratio down as far as possible". Subsequent Chancellors have introduced other spending rules, including trying to reduce the overall amount of debt, which now stands at £1.8 trillion.

But Samuel Tombs, chief United Kingdom economist at Pantheon Macroeconomics, said the figures did not necessarily indicate an improving economy: "Rapidly falling public borrowing continues to reflect sharp falls in spending, rather than a reviving economy".

Stripping out the effect of the BoE scheme, net debt as a share of GDP has been falling for two years and touched a six-year low of 76.3 per cent last year, albeit flattered by a changed treatment of public housing.

On a day-to-day basis, which excludes capital spending, the British government posted its first current account surplus since 2001/2002.

United Kingdom borrowing lowest since March 2007