The government borrowed nearly £4 billion more than forecast by the Office for Budget Responsibility (OBR) in the financial year to the end of March, according to the Office for National Statistics (ONS).
Revealed by the Chancellor George Osborne, the OBR had forecast borrowing to be £72.2bn in the 2014/15 year. But the latest estimates from the ONS claim the government borrowed £76bn, £2bn up on its own previous forecast.
The ONS highlighted that borrowing has generally fallen every year since its peak in 2009/10, when it was around double current levels. The 2014/15 figure was down £15.7bn on the previous year.
In addition to borrowing more than forecast last year, the government got off to a bad start in April, with ONS figures showing borrowing in the first month of the year was around £600 million more than expected. The government borrowed £7.2bn to start the financial year, down last year's £7.5bn. But it still exceeded expectations of £6.6bn.
The government said tax receipts from companies fell short of its own forecasts, resulting in the missed target.
Sumita Shah, ICAEW public sector policy Mmanager, said: "It was bad news for the Chancellor at the end of the 2015-2016 financial year, as he missed his deficit target by £1.8bn. However the UK economy has something to be positive about, as this month’s public sector net borrowing is reportedly down on that of April 2015. With ongoing uncertainty surrounding the EU Referendum hampering business confidence and GDP growth, this gives the government a much-needed boost before voting takes place on 23 June.
“It appears that George Osborne has momentarily managed to dig himself out of the fiscal hole he was in, giving an element of buoyancy to his long-term economic plan. However, the Government must still work at implementing a comprehensive and robust financial strategy, based on accurate reporting and projections, if the notion of returning to surplus by 2020 is to become feasible.”
Economics blogger, Michael Baxter, said: "At first glance these figures seem odd. UK employment is at a record high, at just 5.1% unemployment is modest by past standards. You would have thought that income tax receipts would have come rolling in. So why hasn't this happened? The answer quite simply is that wages are not rising at the pace economists would have normally expected given the other conditions in the labour market. The explanation for low wages growth lies with lie growth in productivity: the UK's economic disease. Ironically, maybe austerity has contributed toward this, meaning that the government's attempts to reduce borrowing are having the opposite effect."