Finally, the Tories have tackled the UK’s deficit

Credit where it’s due, Philip Hammond has finally conquered the deficit – albeit several years after his predecessor George Osborne originally promised to have done so.

While the government is still spending more money than it generates, the UK’s rate of borrowing is considerably below pre-crisis levels.

In its analysis of yesterday’s borrowing figures the Office for Budget Responsibility (OBR) published a chart showing the 12-month rolling level of borrowing dipping towards the £20bn mark. Back in 2006, blissfully unaware of the impending credit crunch, the government was borrowing over £40bn a year.

Chancellor Hammond has been helped by spectacularly high tax receipts at the start of this year, producing the UK’s biggest January surplus since comparable records began in 1993.

Monthly figures are volatile and the OBR kept its cool yesterday, warning: “There is still significant uncertainty over the full-year figure – which itself will inevitably be revised over time.”

Furthermore, uncertainty lingers over the broader political and economic horizon. The Bank of England believes there is a one-in-four chance of a UK recession this year, with a Bloomberg survey of economists putting the chance at one-in-three.

Growth is grinding to a halt for some of the UK’s biggest trading partners, while Donald Trump’s erratic personality still raises the prospect of a devastating global trade war. Then, of course, there’s a little matter of Brexit.

Fiscally, the Conservatives have pinned themselves into a corner, promising tens of billions of pounds’ worth of extra spending on the NHS as well as an “end to austerity”. The latter pledge is vague, but most people understand it to mean higher real government spending beyond the health service and a more generous approach to benefits and taxes.

Yesterday's figures, while positive for the Treasury, reminded us how highly we are taxed. “Over the past five years, the income tax bill has risen 15 per cent, VAT 20 per cent, stamp duty 39 per cent, capital gains tax 99 per cent and inheritance tax 53 per cent,” commented analysts at Hargreaves Lansdown.

If the Tories are to convince voters they are a genuine low-tax party, they need to address this – perhaps by raising income tax thresholds without sneakily hiking National Insurance. It’s just as well, then, that Hammond has succeeded in buying some wiggle room.