Osborne barely dents deficit as borrowing comes in at £120bn

Tim Wallace
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THE GOVERNMENT borrowed another £120.6bn in the last financial year, official figures showed yesterday, down just £300m on the previous year.

Despite George Osborne’s efforts to cut the deficit, the national debt rose to 75.4 per cent of GDP and borrowing is predicted to stay at the same level this financial year.

Borrowing for investment came in at £22bn, down 23 per cent on the £28.7bn last year.

But borrowing for current spending barely changed, edging down from £92.2bn to £91.1bn.

Current spending increased £11.8bn, or 1.8 per cent, on the year to £629.6bn. Interest payments fell 1.6 per cent to £47bn but benefits increased 5.6 per cent to £191.7bn.

Total tax receipts increased £9.7bn, or 1.8 per cent, to £545.4bn.

Osborne yesterday denied he was panicking in the face of criticism from the International Monetary Fund over public spending.

“The British economy of course faces very serious economic challenges,” the chancellor said.

But “what the IMF said is that the UK is forecast to grow more than Germany, France and the rest of the Eurozone.”

But analysts remain unconvinced that the finances are improving.

“The big picture is that the government still ran an underlying deficit of almost eight per cent of GDP,” said Capital Economics’ Martin Beck. “Given the economy’s weakness, borrowing is unlikely to see any significant decline this year.”