Borrowing soars again as rise in tax receipts hints at upturn

The Office for National Statistics (ONS) said yesterday that borrowing in the 11 months of the year so far had hit an all-time high of 131.9bn after public sector net borrowing rose again in February.

But there was welcome good news for the Government ahead of next week's Budget and the looming general election as today's figures revealed tax receipts rose by 3.6 per cent – the largest rise since April 2008.

The ONS also revised January's borrowing figures down sharply to 43m from 4.3bn.

Tax receipts have now risen for three out of the last four months after a series of revisions to previous figures, according to the ONS.

It said the February rise to 42.6bn came as a result of the pick-up in economic activity and the reversal in the VAT reduction.

Receipts from VAT, which was hiked from 15 per cent to 17.5 per cent at the start of the year, rose 30 per cent to 6.9bn last month.

Yesterday's figures and the revision to January borrowing will fuel expectations that full-year borrowing will undershoot the Government's grim forecast for 178bn.

Revisions announced have trimmed net borrowing by 2.9bn in the financial year to date, largely due to changes in tax receipt estimations.

Lower than feared levels of unemployment are also thought to be helping limit borrowing.