UK government borrowing fell by £20bn to £52bn in the year to the end of March, according to the latest data from the Office for National Statistics (ONS), published today. Commenting on the latest public finance data, John Hawksworth, PwC chief economist, said:
“Public borrowing fell to around £52 billion in 2016/17, close to last month's Office for Budget Responsibility (OBR) forecast of £51.7bn. As a share of GDP, borrowing was down to 2.6%, the lowest since before the financial crisis.
“It is good news that the deficit is coming down, but it is too soon to be complacent about the state of the public finances. As the OBR said last month, a number of one-off factors relating to the timing of tax receipts and spending flattered the deficit figures for 2016/17 but are likely to be reversed in 2017/18.
“Higher inflation will also act as a drag on growth over the next year while boosting some benefit payments that are linked to prices. So the improvement in the deficit could well be reversed in the coming financial year as the OBR predicted.
“In the longer term an ageing population and rising healthcare costs will also put pressure on the public finances. So while the deficit is now approaching a more sustainable level, there will still be some tough choices ahead on tax and spending for the next government.”