Surprise rise in government borrowing in March

Government borrowing reduced by nearly £11 billion over the last financial year, despite a surprise rise in the figure for March.

Public sector net borrowing, excluding financial interventions such as bank bail-outs, was £18.2 billion in March, up slightly on a year ago and against City hopes of £16 billion, the Office for National Statistics (ONS) said.

But the Government still met the Budget day forecast, announced by its tax and spending watchdog, for borrowing of £126 billion in the year to the end of March.

This was down from £136.8 billion the previous year, after revisions in previous months.

Earlier in the financial year, the Office for Budget Responsibility predicted the borrowing figure would fall to £122 billion but it effectively moved the goalposts after the economy worsened.

The reduction in borrowing over the year was made with the help of tax increases, such as the hike in VAT to 20% from 17.5% and cuts in Government spending.

March's borrowing figure, which showed the biggest rise since November 2010, helped push the Government's net debt back over the £1 trillion mark at 66% of gross domestic product (GDP).

PA