Public sector finances will be better off by £27 billion over the next five years, according to the Office for Budget Responsibility (OBR).
Delivering his Autumn Statement and Spending Review to MPs on Wednesday, the Chancellor George Osborne said higher tax receipts and continually low interest rates will allow the government to borrow up to £8bn less than it had planned.
Despite Office for National Statistics (ONS) figures suggesting that the government would in fact borrow more than intended in the current financial year, the OBR said public sector borrowing would actually fall from £74.1bn to £73.5bn.
The OBR expects borrowing to fall to just under £50bn next year before halving to £24.8bn in 2017-18 and falling to just £4.6bn in 2018-19. Those ONS borrowing figures also resulted in many economists believing that the OBR would push back its forecast for the Treasury reporting a budget surplus. But it maintains that the government will move into a surplus of just over £10bn in 2019-20 and £14.7bn in 2020-21. In fact, the OBR's report shows that without extra spending plans outlined by the Chancellor in the Autumn Statement
But growth in those years is now expected to be slightly slower than forecast in the Summer Budget. Having previously forecast growth of 2.4%, the OBR now expects growth of 2.3% in both years.In fact, the full OBR report shows that had the Chancellor not announced extra spending plans in the Autumn Statement, the government would have nearly reporting a budget in 2018-19, with figures showing a deficit of just £200m.