Doubts have been raised over the government’s ability to announce tax cuts ahead of the next general election after official data showed it borrowed more than expected last year.
The Treasury borrowed £120.7 billion in the financial year ending March 2024, according to provisional estimates from the Office for National Statistics (ONS), which is £7.6 billion less than the previous year.
However, the figure is £6.6 billion more than the Office for Budget Responsibility (OBR) had forecast just a month earlier.
Overall, government debt stood at around 98.3% of UK annual gross domestic product (GDP) in March – up 2.6 percentage points from the previous year and at a level not seen since the early 1960s.
Ruth Gregory, deputy chief UK economist at Capital Economics, said: “If the Chancellor was hoping the March figures would provide more scope for tax cuts in the fiscal event later this year, he will have been disappointed.
“Based solely on the larger-than-expected 2023/24 budget deficit and recent market changes Rate of interest“It may have less fiscal ‘headroom’ (perhaps around £5 billion) for tax cuts than the £8.9 billion left in March.”
Jessica Barnaby, ONS deputy director for public sector finance, said: “Total borrowing in the financial year just ended was approximately £121 billion, approximately £8 billion less than the previous year.
“Spending increased by about £58 billion, with large cuts in interest payable on public services and benefits and energy support scheme costs more than offset by large cuts. But overall, with public sector income rising by £66 billion, The losses still reduced.
“At the end of the fiscal year, debt remained close to the annual value of the economy’s output, a level last seen in the early 1960s.”
A Treasury spokesperson said: “The debt has increased in recent years because we rightly protected millions of jobs during Covid and paid half of people’s energy bills after Putin’s invasion of Ukraine caused bills to skyrocket. Were touching.
“We cannot leave future generations to repay the debt, so we must stick to a plan to reduce the debt. And with inflation falling and wages rising – we are able to cut National Insurance by a third, which Reflects our determination to end double taxation of work”.