ANALYSIS

Pablo shah Centre for Economics and Business Research

SEPTEMBER’S figures on government borrowing confirm that this year is on track to be the strongest year for the public finances since 2002. Indeed, since March the government has borrowed £19.9billion – 35 per cent down on the amount borrowed at this point last year.

With the government’s deficit – the difference between the amount it spends and the amount it collects in taxes – projected to fall below 2 per cent of GDP this year, the UK has come a long way since the tempestuous times of the 2008 financial crisis, when the combination of the £500billion bank rescue package and a collapse in tax revenues wrought havoc on the public finances.

At its peak in 2009/10, the government deficit reached nearly 10 per cent of GDP. Moreover, in just a single month of 2009, the UK government borrowed more than it has in the first six months of this financial year.

Since the formation of the Conservative-led coalition with the Liberal Democrats in 2010, Conservative governments have made tackling the UK’s deficit a priority.

The government’s efforts in recent years to reign in borrowing have provided sufficient headroom to deliver on its spending promises while continuing to eat away at both the deficit and the national debt.

On this occasion at least, the Prime Minister may be able to have her cake and eat it.