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UK Chancellor Gains £5bn Boost for Tax Cuts as Public Borrowing Falls

Lower borrowing amount attributed to falling debt interest payments and end of energy subsidies, providing more room for tax cuts in upcoming Budget.

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Overview

  • UK Chancellor Jeremy Hunt has been given a £5bn boost for tax cuts in the upcoming Budget due to a decrease in public borrowing in December.
  • Public borrowing fell to a pre-lockdown low of £7.8bn in December, less than half of last year's borrowing figure and the lowest December borrowing since 2019.
  • The lower borrowing amount is attributed to falling debt interest payments and the end of blanket energy subsidies.
  • The Office for National Statistics (ONS) revised down its estimate for November, meaning the Treasury has borrowed £119.1bn so far this financial year, £5bn less than predicted by the Office for Budget Responsibility (OBR) two months ago.
  • This suggests the Chancellor will have around £20bn of space to cut taxes, according to Ruth Gregory, deputy chief economist at Capital Economics and a former OBR analyst.