Sharp fall in government borrowing in April

It is a huge lift to George Osborne's deficit-cutting ambitions

VAT and income tax takings in April have swelled the Treasury's coffers by more than expected (AFP/Getty Images)

The Chancellor received a huge lift to his deficit-cutting ambitions today as VAT and income tax takings in April swelled the Treasury's coffers by more than expected.

George Osborne is aiming for £75.3bn in borrowing for the current financial year, under the latest targets set by the Office for Budget Responsibility.

The official figures showed net borrowing of £6.8bn last month – a whopping £2.5bn lower than last year and the smallest deficit for the month since 2008.

April’s VAT tax take of £10.6bn was the best for the month since official records began in 1997 and the Treasury also enjoyed the highest April for corporation tax revenues since 2008. Ultra-low inflation is meanwhile lowering interest payments on inflation-linked debt, reducing government spending along with a departmental squeeze. Mr Osborne is aiming to wipe out the deficit by 2018/19 with a fresh round of cuts to welfare and departmental spending looming in July’s Budget.

Samuel Tombs, the senior UK economist at Capital Economics, said: “A major and painful re-intensification of the fiscal squeeze will still be required for the Government to obtain an overall budget surplus in this Parliament.”