LONDON (Reuters) - Britain’s government will need to borrow 23.5 billion pounds less between the current financial year and 2021 than it expected a few months ago, helped by the economy’s resilience to last year’s Brexit vote, according to official budget forecasts.
Chancellor Philip Hammond said on Wednesday that the budget deficit for the current financial year was expected to fall to 51.7 billion pounds, lower than a shortfall of 68.2 billion pounds foreseen in a budget update in November.
The combined deficit for the five financial years between 2016/17 and 2020/21 stood at 192.8 billion pounds compared with 216.3 billion in November’s forecasts.
Hammond said the decrease compared with November’s forecast mostly reflected one-off factors rather than a major structural improvement in the public finances.
Hammond has said he will not use any good news on the outlook for the public finances to increase spending or cut taxes significantly now. Instead, he wants to give himself room to help the economy in the future, should it be hit by uncertainty over the country’s exit from the European Union.
Britain’s public finances are still expected to be in the red by the 2021/22 financial year, the end of the forecast period of the Office for Budget Responsibility.
This represents a significantly less rapid pace of deficit reduction than Hammond’s predecessor George Osborne planned before the June 2016 referendum on European Union membership.
($1 = 0.8223 pounds)
Reporting by Andy Bruce; editing by Michael Holden