Britain's public borrowing falls to lowest level since the financial crisis

Britain's national borrowing fell to its lowest in almost a decade in March, delivering a boost to the Treasury ahead of June's snap general elections, official figures released on Tuesday (25 April) showed.

According to the Office for National Statistics (ONS), excluding public sector banks, the UK borrowed £52bn in the 2016-17 financial year, marginally above the £51.7bn forecast in last month's budget, but a 28% year-on-year decline.

The figure marked the lowest level on record since the financial crisis, when it stood at £40.4bn.

However, in March alone, excluding public sector banks, net borrowing increased rose £0.8bn to £5.1bn.

The latest figures are likely to be welcomed by the Conservative Party, particularly after Chancellor Philip Hammond said reducing the fiscal burden would continue to be a key point of the party's election manifesto.

The Chancellor has already announced a swift U-turn from his budget by scrapping plans to raise national insurance contributions for the self-employed following strong criticism from his own party as well as in the media. This increase in the National Insurance rate was due to raise over £2bn by 2022, meaning the Treasury will now have to find an alternative solution to plug the gap.

"Hammond is clearly keen to keep fiscal ammunition up his sleeve – due to the major uncertainties and downside risks that the economy faces as it navigates its way out of the EU," said Howard Archer, chief UK and European economist at IHS Markit.

"Despite the resilience of the economy through the second half of 2016 following June's Brexit vote, the Chancellor is very well aware that a challenging road lies ahead."

Analysts attributed much of the annual fall was to one-off timing factors including forestalling ahead of the rise in dividend tax in April 2016 and delays in the requests for contributions to the EU budget.

Consequently, they suggested borrowing could rise by a few billion pounds in 2017-18 as these factors unwind.

"Nonetheless, looking through these temporary factors, fiscal policy is still set to provide a significant drag on GDP growth over the next few years," said Scott Bowman, UK economist at Capital Economics.

"And we doubt that this stance would be changed significantly in a potential post-election Budget (so long as the Conservatives win a majority)."

The ONS added public finances over 2016/17 benefited from the resilience of the economy and a strong labour market which lifted tax receipts to a record high of £55.7bn.