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In the past 11 years, government borrowing has fell to its lowest amount according to the latest official figures. Borrowing fell to £42.6bn in the 2017/18 financial year. Which is a £3.5bn decrease from the last financial year.
Borrowing has narrowed to 2.1% of Gross Domestic Product (GDP) last year, which is down 10% from 2010.
The previous chancellor, George Osborne was set to decrease the gap between borrowing and spending. Although the current chancellor – Phillip Hammond is on the same mission to do so, he has eased off on the pace of cut backs.
We are at a point in the economy now where the debt is starting to fall and people’s wages are rising. Helping build an economy which works for everyone and one where the borrowing is falling year on year.
Is this a good thing for the economy?
Many do not believe this is a turning point for the economy, with Samuel Tombs, chief UK economist at Pantheon Macroeconomics agreeing with this. He stated that the falling public borrowing reflects the sharp fall in spending which is not reviving the economy.
What is happening to interest rates
This year, the Bank of England is looking to increase the interest rates twice. Yet any increase here will be gradual. Looking to normalise the monetary policy, and the EY ITEM club’s prediction expects an increase in growth for GDP being 1.6% this year and 1.7% in 2019.
However, this is a worry to some, as many believe that by having two increases will exert unnecessary pressure on consumers.
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