The recent Government borrowing figures could mark a blow to any tax cut prospects ahead of the next general election, experts have said.

According to new data published by the Office of National Statistics (ONS), borrowing exceeded the OBR forecast by £6.6 billion, leaving borrowing in the financial year ending March 2024 provisionally estimated at £120.7billion.

Public sector net debt (excluding public sector banks) at the end of March 2024 was provisionally estimated at 98.3 percent of Gross Domestic Product (GDP).

This marked an increase of 2.6 percentage points from the end of March 2023 and remains at levels last seen in the early 1960s.

Tax receipts are up 7.5 percent, or £52.6billion, compared to the previous year, and interest payments have reportedly fallen by £29.3billion. Meanwhile, benefit payments rose by £36.9billion to reach £291.4billion, largely due to the inflation-linked uprating.

Danni Hewson, head of financial analysis at AJ Bell, commented: “On the face of it the latest public sector finances don’t appear to give the current chancellor the sort of cushion he needs to deliver a voter-pleasing pre-election tax cut.

“Borrowing last year overshot forecasts as benefit payments were boosted and wages were also increased to help public sector workers deal with cost-of-living pressures.

“But as the inflationary backdrop pushed many employers to dole out chunky pay rises while tax thresholds were held steady, our old friend fiscal drag helped boost Government coffers with income tax payments up a sizable £24.6billion over the year.”

A hike to corporation tax further boosted Government income, as well as price rises forcing up VAT levels.

Mr Hewson continued: “All told, public sector receipts came in at £66billion – a sum which helped offset all those extra demands on the public purse.

“Interest payments on the whopping £2.7trillion debt pile also fell as inflation cooled.

“But debt as a percentage of GDP is still nestling at an uncomfortable 98.3 percent and the impact of the second round of National Insurance cuts has yet to be felt.”

However, he noted: “The healthy tax take is an indication that the economy has been incredibly resilient, even in the midst of a recession.

“But public sector services are creaking and looking at these numbers there seems little room for manoeuvre, especially if whoever sits behind the desk at number 11 wants to create some insulation against another big crisis like the pandemic.

“All of that doesn’t necessarily mean tax cuts are less likely, it just means that what comes next is likely to hurt more.”