Government borrowing in September lowest since 2007

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Government borrowing fell by more than expected last month, to £4.1bn from £4.9bn a year earlier.

It was the lowest borrowing figure for the month of September since 2007, the Office for National Statistics said.

Borrowing for the year to date is 35% lower at £19.9bn, potentially giving Chancellor Philip Hammond room for manoeuvre in the upcoming Budget on 29 October.

The ONS said it was the lowest year-to-date total since 2002.

Economists had expected a September borrowing figure of £4.5bn.

Public sector net debt, excluding public sector banks, now stands at £1,789.5bn, equivalent to 84.3% of GDP. That is £3.4bn higher than a year earlier, but lower as a percentage of GDP than in 2017, when it was 86.7%.

“The public finances have continued to improve rapidly this year, enabling the chancellor to accommodate plans for higher NHS spending without raising other taxes or cutting spending in other departments more aggressively over the next couple of years,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

“Real-terms increases in NHS spending mean other departments will have to endure further cuts, but Mr Hammond needn’t intensify them.

“That said, the prime minister is using the promise of higher spending as a bargaining chip to corral her MPs into supporting her Brexit plan.”

This made it likely that the Budget would be a “holding statement”, he said, with more decisive measures delayed until next year.