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Lower than expected government borrowing last month has increased the possibility of tax cuts in the Budget, analysts say.
Borrowing – the difference between spending and tax income – fell to £7.8bn in December, the Office for National Statistics (ONS) said.
Interest payments dropped sharply due to a rapid decline in inflation.
The amount was well below forecasts, and analysts said the figure could give leave “wiggle room” for tax cuts.
December’s borrowing figure was £8.4bn less than a year earlier, and the lowest figure for the month since 2019.
Interest payments on government debt fell to £4bn, down by £14.1bn from December 2022.
It was helped by the fall in inflation last year. The government’s interest payments are linked to the Retail Prices Index measure of inflation.
Ruth Gregory, deputy chief UK economist at Capital Economics, said the better-than-expected figures for December would give the chancellor “a bit more wiggle room for a big pre-election splash in the spring Budget on 6 March”.
Last week,…
