Today’s Public Sector Finances bulletin also showed government borrowing in the 2014/15 tax year increased to £87.7bn compared to an earlier statement of £87.3bn, but was below the government’s goal of £90.2bn.
These figures are the second estimate of the full 2014/15 financial year, but the ONS said they may be revised further.
In his March Budget, Chancellor George Osborne said he wanted to cut borrowing to £75.3bn in the current financial year. A second Budget on July 8 will set out details on a planned £12bn cut to welfare and departmental spending reductions.
‘Today’s figures show that our deficit reduction plan is working, with borrowing down £2.5bn compared to a year ago,’ a Treasury spokesman said.
‘We have more than halved the deficit, but at just under 5% it is still one of the highest in the developed world. There is no shortcut to fixing the public finances so we have to continue with the hard work of identifying savings and making reforms necessary to finish the job and build a resilient economy.’
Commenting on the figures, Soumaya Keynes, a research economist at the Institute for Fiscal Studies, said: 'With only data from April, we cannot yet say much about the public finances for the whole of the current financial year. Despite this, the figures do give George Osborne two things to be pleased about.
'First, in a month when a hefty chunk of corporation tax revenues are received, growth in this source of revenues has been impressive. It is up by 11.3% – or £0.6bn – in April compared to the same month last year. This is strong compared to a slight nominal fall in corporation tax receipts the Office for Budget Responsibility forecast for the financial year as a whole.
'Second, the latest outturn for borrowing in the last financial year remains slightly lower than the Office for Budget Responsibility expected back in March.'
But she added that the big picture for the public finances had not changed, and the chancellor would need to implement 'hefty' spending cuts in order to meet his aspiration of a budget surplus in 2018/19.Azad Zangana, Schroders’ senior European economist, said the UK’s public finances had got off to a ‘good start’ in the new financial year.
Higher employment, a steady rise in wages, and an overall stronger economy have all helped to boost government tax revenues.
‘However, the bulk of the reduction in borrowing has come from austerity through spending cuts. Tax receipts in total increased by £1.4bn or 2.7% over the year, but spending has fallen by £4.6bn or 7.4%.
‘Interestingly, despite the cut in government expenditure, public sector investment continues to rise with day-to-day departmental spending reporting the biggest falls,’ he said.
‘The latest budget deficit is the lowest recorded for the month April since 2008, suggesting the public finances are recovering from the worst effects of the global financial crisis.’
