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UK Government spending falls to eight year low


UK Government borrowing fell to £10.13 billion in May, according to The Office of National Statistics.

Both a rise in income tax and VAT receipts helped to cut government spending last month to £10.13 billion, compared to £12.35 billion a year earlier. This year saw the lowest May borrowing figures in eight years.

Public sector net debt excluding public sector banks now stands at £1.5 trillion, the ONS said, which is 80.8% of gross domestic product (GDP).

Income Tax receipts have seen their highest levels for May in four years, rising 5.3% to £10.8 billion. VAT receipts rose by 5.6% to £10.7 billion. The ONS has now predicted total public sector borrowing in the financial year to March 2015 was £89.2bn, or 4.9% of GDP.

A spokesperson for the ONS said:

"While the deficit in the financial year ending 2015 has fallen by more than a third since its peak in the financial year ending 2010, public sector net debt has maintained a gradual upward trend."

Howard Archer, chief UK economist at IHG Global Insight:

"The chancellor is currently on track to significantly undershoot his fiscal targets for 2015-16.
"Major questions remain ahead of the extra Budget on 8 July over the new Conservative government's ability to meet its ambitious fiscal targets over the longer term.

"In particular, the government is yet to clarify exactly where the planned cuts to departmental spending (£30bn) and welfare spending (£12bn) will be made."

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