Government borrowing cut by £11bn

Public sector net borrowing, excluding financial interventions such as bank bail-outs, was £18.2bn in March, up slightly on a year ago and against City hopes of £16bn, the Office for National Statistics (ONS) said.

But the Government still met the Budget day forecast, announced by its tax and spending watchdog, for borrowing of £126bn in the year to the end of March.

This was down from £136.8bn the previous year, after revisions in previous months.

Earlier in the financial year, the Office for Budget Responsibility predicted the borrowing figure would fall to £122bn but it effectively moved the goalposts after the economy worsened.

The reduction in borrowing over the year was made with the help of tax increases, such as the rise in VAT to 20 per cent from 17.5 per cent and cuts in Government spending.

March’s borrowing figure, which showed the biggest rise since November 2010, helped to push the Government’s net debt back over the £1 trillion mark at 66 per cent of gross domestic product (GDP).

A Treasury spokesman said: “Today’s data shows that the forecast for 2011/12 is on track.”