Britain's deficit hits 11-year low

[LONDON] Britain's deficit improved last year to reach the lowest level in more than a decade, aided by ongoing state austerity, official data showed Tuesday.

Public sector net borrowing, the government's preferred deficit measure, stood at £42.6 billion (S$79.3 billion) excluding bank bailouts in the 2017/2018 year to March, the Office for National Statistics said in a statement.

That contrasted with £46.2 billion in the previous financial year and was the lowest level since 2006/2007, according to the ONS.

The figure undershot the £45.2 billion predicted by fiscal watchdog the Office for Budget Responsibility.

Analysts cautioned that low borrowing is not indicative of a resurgent economy - which still faces uncertainty over Britain's looming exit from the European Union next year.

"Drops in public spending are often seen as a sign of economic strength - but this is not really the case here, with it being more an example of the government sticking to its guns as far as austerity ... is concerned despite relatively low levels (of) growth," said XTB analyst David Cheetham.

And Pantheon Macroeconomics analyst Samuel Tombs added: "Rapidly falling public borrowing continues to reflect sharp falls in spending, rather than a reviving economy." The ONS also said Tuesday that the government enjoyed the first surplus on day-to-day state spending for 16 years.

The data showed a £112-million surplus in 2017-2018 on the government's current budget, which measures day-to-day spending. That was the first surplus since 2001-2002.

AFP