2014.04.2308:08:00UTC+00U.K. Chancellor Achieves 2013/14 Deficit Target

U.K. Chancellor George Osborne achieved his budget deficit target for 2013/14 as buoyant economic growth boosted tax receipts.

Data from the Office for National Statistics on Wednesday showed that net borrowing totaled GBP 107.7 billion in the fiscal year ended March 2014, the lowest since the 2008/2009 financial crisis.

The deficit came in slightly below the GBP 107.8 billion deficit projected by the Office for Budget Responsibility. Borrowing decreased from the GBP 115.1 billion shortfall posted in 2012-13.

The latest borrowing figure excludes transfer of the Royal Mail pension and gains from the Bank of England's asset purchases for quantitative easing.

Despite the Chancellor achieving his downwardly revised fiscal target for 2013/14, it will clearly need sustained improvement in growth and in the public finances before any of the credit rating agencies seriously consider upgrading their sovereign credit rating for the U.K., said IHS Global Insight's Chief UK Economist Howard Archer.

The government targets to eliminate the budget deficit by 2017-18. The OBR forecasts 2.7 percent GDP growth this year and 2.3 percent in 2015.

Samuel Tombs, a U.K. economist at Capital Economics, remains cautiously optimistic on the potential for stronger GDP growth than the OBR expects to eliminate the deficit more quickly than the official plans anticipate.

In March, the government borrowed GBP 6.7 billion, down from GBP 11.4 billion borrowed last year. It was also smaller than the expected shortfall of GBP 11 billion.

Stamp duties surged 44.5 percent driven by huge property sales and income tax increased 7.8 percent in March.

At the end of March, public sector net debt excluding temporary effects of financial interventions was GBP 1,268.7 billion, equivalent to 75.8 percent of gross domestic product.

Net cash requirement of the central government for the financial year 2013/14 was GBP 75.4 billion, which was GBP 29.6 billion lower than the same period in 2012/13.