Osborne misses deficit goal despite stamp duty boost

THE Chancellor was left red-faced today as he bust his borrowing target by nearly £2 billion despite a huge surge in stamp duty revenues last month.

In March, the Government borrowed £4.8 billion, which took the overall deficit for the financial year to £74 billion — £1.8 billion more than predicted by the Office for Budget Responsibility fiscal watchdog in last month’s Budget.

George Osborne (pictured) is attempting to gain an overall surplus in the public finances by 2019/20 but the latest figures represent an early setback to those efforts.

Economists at the Centre for Economics and Business Research predict a £30 billion deficit in 2019-20 as the Chancellor is hemmed in by commitments not to raise some taxes, as well as ringfenced spending plans. “It is very likely that within a couple of years the Chancellor will be faced with the unenviable task of deciding between cutting long-term investment spending or giving up on the self-imposed goal of eliminating the deficit,” senior economist Nina Skero said.

The borrowing figures would have been even worse but for a surge in stamp duty land tax revenues. Receipts jumped to £960 million from £728 million a year ago as buy to let investors rushed to beat the Chancellor’s April introduction of a 3% surcharge on second homes. The Council of Mortgage Lenders also reported loans of £25.7 billion in March — 59% ahead of the same month last year and the biggest March for mortgage lending since the pre-credit crunch days of 2007.

Although higher than expected, the UK’s overall deficit still fell £17.7 billion on last year and the borrowing figures could yet be revised. Capital Economics economist Vicky Redwood said: “The OBR warned that the improvement in borrowing that it expected to see at the end of the fiscal year might only become apparent in later revisions.