Osborne is set to beat deficit goal after dip in borrowing

editor:

0131-620 8462 GeorGe oSBorNe is expected to beat his deficit-busting target by a wide margin this year after another fall in central government borrowing.

As tax receipts rose on the back of the housing market boom and wider economic recovery, the office for National Statistics (oNS) said public sector net borrowing – excluding the distorting effects of bank bailouts – fell by £1 billion to £12.1bn last month. It follows August’s drop of almost £1.3bn.

However, the Chancellor insisted the figures would not divert him from his austerity drive, because an improving economy on its own would not be enough to rein in the budget deficit.

osborne said: “An improving economic situation in the UK does not automatically lead to a windfall for the public finances because we shouldn’t assume that a structural deficit is solved by an improvement in GDP. It’s called a structural deficit for a reason.”

Howard Archer, chief UK and european economist at IHS Global Insight, said the pressure on osborne to relax his spending cuts has fallen away because of the improved economic performance “and will likely only resurface should the economy suffer a marked relapse over the coming months”.

James Knightley, senior economist at ING Bank, said the figures were “fractionally better than expected” and there were hopes for further improvements as the economy continues to grow and London’s property boom contributes to the tax take from stamp duty, which surged 39 per cent to £817 million.

The independent office for Budget responsibility (oBr), set up to monitor