Error parsing XSLT file: \xslt\FacebookOpenGraph.xslt Budget 2015: Extra cash cuts borrowing
Cookies on Businesscar

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we will assume that you are happy to receive all cookies on the Business Car website. However, if you would like to, you can change your cookies at any time

BusinessCar magazine website email Awards mobile

The start point for the best source of fleet information

Budget 2015: Extra cash cuts borrowing

Date: 18 March 2015   |   Author: Rupert Saunders

The Chancellor resisted the opportunity to use an estimated £6bn Budget windfall as a pre-election 'giveaway' electoral sweetener and, instead, will use the money on the rather more mundane task of paying down the nation's debt.

The windfall occurs primarily because low inflation has kept down interest payments on existing government debt and index-linked rises in welfare payments.

Putting the money back into the bank allowed the Chancellor to announce that UK borrowing as a percentage of GDP would start to fall one year earlier than expected. It will be 80.4% of GDP in the current financial year, falling to 80.2% in 2015/16 and 79.8% in 2016/17.

The deficit (the difference between the amount the country borrows and the amount it makes) as a percentage of GDP will drop from 5% this year to 4% next year and then 2% in 2016/17. The Chancellor suggested the country would be 'back in the black' by 2018/19 when there would be a £5.2bn annual surplus.

The government will be borrowing £5bn less than previously forecast over the period.

The Chancellor was noticeably reticent to talk about inflation, predicting it would be 0.2% this year but offering no forecasts for 2016 or 2017. That figure is well below the 1.2% predicted in the autumn statement.

However, he did confirm that the Monetary Policy Committee would still be working to a 2% inflation target.