UK public sector borrowing falls to 16-year low

Ahead of the autumn budget in October, Chancellor Phillip Hammond will have an extra £10 billion at his disposal to make good on government promises to end austerity after public borrowing falls to lowest level since 2002.

UK public sector borrowing fell to an 11-year September low of £4.1 billion, which is 800 million less than in the same month a year prior, according to the Office of National Statistics (ONS).

Furthermore, borrowing in the current financial year-to-date was £19.9 billion, which is £10.7 billion less than in the same period last year – representing a 16-year low.

Autumn budget

The positive news comes with just ten days to go until Chancellor Philip Hammond outlines the autumn budget where the government is tasked with finding an extra £20 billion a year in funding for the NHS.

On 29 October, the Chancellor is likely to outline tax increases and measures for how the government will unwind austerity after the Prime Minister Theresa May pledged to end it at her most recent Conservative party conference.

With the government recording a smaller budget deficit than expected in September, it offers more flexibility in public spending for the remainder of the year.

However, with Brexit looming large it is unlikely that the government will announce a spending splurge in the upcoming autumn budget.

National debt

It is also worth noting that public sector debt (excluding public sector banks) at the end of September stood at £1.79 billion – representing 84.3% of gross domestic product (GDP) – an increase of £3.4 billion from the same time a year ago, according to ONS data.

In the wake of public spending data, the pound climbed 0.1% against the dollar and rose 0.2% against the euro at 1.14, with sterling holding its ground amid Brexit deal delays.

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