UK budget deficit narrows in April

A sharp fall in Whitehall spending and lower interest bills on government debt helped narrow Britain’s public sector budget deficit in April.

The Office for National Statistics said public sector net borrowing, excluding state-controlled banks, totalled 6.8 billion pounds in April, down nearly 27 per cent from a year earlier and the lowest shortfall for that month since 2008.

Income tax revenues also rose to 11.6 billion pounds, the highest amount for April in two years as Britain’s economic recovery translated into more tax receipts.

According to the Guardian, central government spending fell including a near 7 per cent reduction in interest payments as Britain’s ultra-low inflation reduced the government’s bill on inflation-linked bonds which has also helped narrow the deficit[1].

Since the Tory victory in the May General Election, Osborne has revealed plans to erase the deficit by 2018-19. The International Monetary Fund has raised doubts about whether Osborne can hit his targets, and many economists are sceptical that he can eliminate the deficit without raising taxes.

[1] Nick Ansell, The Guardian Online