UK government deficit falls below target
UK public sector debt has been revised down for the last year, giving a boost to the economic credentials of the Conservative and Liberal Democrat coalition ahead of the general election.
Although weak retail sales figures for March may increase the chances that gross domestic product will show a slowdown in economic growth for the first quarter, the government borrowed £87.3bn in the 2014/15 fiscal year, below both the official budget forecast of £90.2bn from the Office for Budget Responsibility and down £11.1bn compared with last year’s total.
This was thanks to the Office for National Statistics revealing borrowing in March had fallen to £7.4bn, slightly worse than expected, but less than the £7.8bn last year. This came on top of a £2bn downward revision to borrowing in previous months.
Government revenues were boosted by stronger income tax receipts, which had waned throughout most of 2014 but started to improve towards the end of the year. Meanwhile, expenditure was lower as the British treasury benefited from lower interest rates for debt repayment.
The Conservative party has championed its budget discipline relative to Labour and has stressed economic recovery should be at the forefront of voters' minds.
However, Labour insists that it will still balance the books, albeit at a slower pace due to investment in infrastructure. The Labour manifesto pledges to “get national debt falling and a surplus on the current budget as soon as possible in the next parliament.”
The ONS will publish its preliminary estimate of economic growth during the first quarter of 2015 next week, with indicators suggesting a slowdown compared to the final quarter of 2014.