Government borrowing in May falls to an eight-year low
Strong growth in income tax receipts helped whittle government borrowing down to an eight-year low last month.
Public sector net borrowing, excluding public sector banks, was £10.12bn in May 2015, compared to £12.35bn from the same time year the same time a year ago. And this was below economists' forecasts of £10.8bn.
This meant public sector net borrowing in the first two months of the 2015/16 tax year was almost a quarter less than in April and May 2014, at £16.4bn.
Tax receipts rose 4.1 per cent to £45bn from the same time a year earlier. Corporation tax receipts fell 4.8 per cent, but VAT receipts increased 5.6 per cent while income-tax-related payment jumped 5.3 per cent.
The ONS said income tax receipts for May were their strongest for that month in four years and – when combined with national insurance contributions – this was a record high.
This is good news for chancellor George Osborne, who is expected to outline ambitious spending cuts in his post-election budget statement on 8 July.
Public sector net debt continued to climb, hitting £1.5 trillion, or 80.8 per cent of gross domestic product, representing an increase of £83.2bn compared with May 2014.