The Government borrowed nearly £5bn less than expected over the past year, but a raft of data yesterday laid bare the parlous state of the country's finances, according to the Office for National Statistics.
Public-sector net borrowing, excluding temporary financial costs, such as from the bank bailouts, came in at £141.1bn for the year to March 2011, which was down from the Office for Budget Responsibility's (OBR) forecast at the time of last month's Budget.
Vicky Redwood, the senior UK economist at Capital Economics, said: "But that is still a huge number – and the Government will find it much harder to meet this year's borrowing target if the economic recovery disappoints."
The reduction was partly driven by better-than-expected tax receipts over the year, such as the hike in VAT to 20 per cent on 4 January. The Government's receipts from VAT jumped by 15 per cent over the year to £96.5bn.
The Chancellor has a target to reduce public-sector net borrowing, excluding financial interventions, to £122bn this financial year, based on an expectation the economy will grow by 1.7 per cent in 2011.
However, Howard Archer, the European economist at IHS Global Insight, said this target still "looks challenging given the headwinds facing the economy", adding that the Chancellor's forecast on economic growth are "little bit on the optimistic side".
Mr Archer said: "We expect GDP growth to be 1.5 per cent in 2011 and consider the risks to this forecast to be slanted to the downside. The Chancellor is looking for GDP growth of 2.5 per cent in 2012, while we project growth at 2.2 per cent."
Elsewhere, the dreadful state of the Government's finances were highlighted by public-sector net debt coming at £903.4bn, equal to 59.9 per cent of GDP, although this was again slightly lower than the OBR's forecast of 60.3 per cent.
Furthermore, the Government's current budget deficit registered at £100.9bn.Reuse content