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Hammond given budget boost as borrowing falls to lowest level in 11 years

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Chancellor Philip Hammond has been given a boost in the run up to the budget with borrowing last month falling to its lowest level in more than a decade.

The budget deficit in September stood at £4.1bn, £800m less than for the same month last year, according to the Office for National Statistics.

The lowest September borrowing for 11 years, economists had been expecting a figure of £4.5bn.

So far in this financial year, April to September, borrowing totals £19.9bn, down 35% on the same period last year and the lowest figure for this stage of the year since 2002.

The data comes as Mr Hammond prepares to unveil his budget on 29 October, although he is not expected to announce any major spending changes in the countdown to Brexit and with no divorce deal yet struck.

However, he is due to give details of how Theresa May’s previous pledge of an extra £20bn a year in NHS spending, phased in over the next five years, will be funded.

The prime minister has also given a commitment to end austerity, which could have implications for the chancellor’s target to balance the nation’s books by the mid-2020s.

The Office for Budget Responsibility has forecast that Brexit will have an overall negative impact on the public finances.

Mr Hammond has also said he wants to cut the national debt as a share of GDP.

Public debt stood at £1.79tn in September or 84.3% of gross domestic product, down from 86.7% in the same month last year, but double its level before the financial crisis.

Commenting on the latest figures, Samuel Tombs of Pantheon Macroeconomics said: “The public finances have continued to improve rapidly this year, enabling the chancellor to accommodate plans for higher NHS spending without raising other taxes or cutting spending in other departments more aggressively over the next couple of years.”

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