The UK government budget came in below its annual borrowing target by \u00a3700m, official figures show \u2013 but the Iran war is likely to blow a hole in Rachel Reeves\u2019s carefully calculated fiscal \u201cheadroom\u201d over the coming months.<\/p>\n
The government borrowed a net total of \u00a3132bn for the financial year ending in March, the Office for National Statistics (ONS) said. This slightly undershot the \u00a3132.7bn that the Office for Budget Responsibility<\/a> (OBR) had forecast just last month.<\/p>\n The total was \u00a319.8bn less than the \u00a3151.9bn borrowed in the previous financial year, after rounding, although it was still the sixth highest on record.<\/p>\n The figure was the lowest in three years and the best result since Labour came into power in July 2024. The last time it was lower was in the year to March 2023, when the government borrowed \u00a3127.3bn.<\/p>\n \u201cThe headline numbers coming in lower than the OBR\u2019s expectations for the year as a whole will be a welcome boost to the chancellor,\u201d Elliott Jordan-Doak, a senior UK economist at Pantheon Macroeconomics, said.<\/p>\n For the month of March, public sector net borrowing \u2013 the difference between spending and income \u2013 was \u00a312.6bn, which was \u00a31.4bn lower than a year earlier and the lowest since March 2022. City economists had expected the March figure to be \u00a310.3bn.<\/p>\n The annual figure was better than economists had expected after upward revisions for the previous two months. January\u2019s record-breaking surplus was revised up to \u00a332.2bn, while government borrowing in February was revised down from \u00a314.3bn to \u00a312.8bn.<\/p>\n James Murray, the chief secretary to the Treasury, said: \u201cOur deficit is down \u00a319.8bn because of our plan to cut borrowing. In a volatile world the decisions we are taking are the right ones to keep costs down, take back our energy security and cut borrowing and debt.\u201d<\/p>\n