The government has already missed its deficit reduction targets as public sector borrowing comes in at £74bn for 2015/16
The government has fallen short of its target to cut the deficit – just one month after it made its latest prediction.
Public sector net borrowing, the amount the government needs to borrow in order to meet its spending commitments, came in at £74bn in the 12 months to March. This was down on the £92bn shortfall recorded in the 2014/15 financial year, but above the forecast of £72.2bn made just five weeks ago in George Osborne's latest Budget.
Higher tax revenues accounted for the fall in the deficit. The Office for National Statistics (ONS) said central government receipts grew four per cent to £636bn in the financial year, while spending remained flat at £686bn. In addition to its day-to-day deficit, the government also borrowed a net £35bn to fund capital investment projects.
This took the total level of outstanding debt in the 2015/16 financial year to £1.6 trillion – or 83.5 per cent of the UK's GDP, up from 83.3 per cent last year.
The Treasury said the figures showed that "the job of repairing the public finances is not done", while it pointed to the fact that net borrowing in the month of March was its lowest for a decade.
This is just the latest occasion where the chancellor has failed to hit his self-imposed targets, and the Centre for Economics and Business Research (CEBR), the British Chambers of Commerce (BCC) and the accountants body, the ICAEW, all said further misses may be on the way.
"The OBR and the Chancellor are overly optimistic about the UK’s chances of eliminating the budget deficit by 2020," said Nina Skero, senior economist at the CEBR.
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The BCC said: "Our view is that the return to a budget surplus may take a little longer than the OBR predicted."
"Unless the UK economy, against the backdrop of a global economy that is unwilling to help the Chancellor dig himself out of out of his fiscal hole, improves somehow, it looks like the notion of returning to surplus by 2020 is highly improbable," added Ross Campbell, director for public sector policy at the ICAEW.