Chancellor on Budget tightrope as government borrowing falls to eight-year low … but national debt tops £1.5 TRILLION for the first time

George Osborne received a pre-Budget boost yesterday as a surge in income tax receipts pushed government borrowing to an eight-year low.

The Office for National Statistics said the state borrowed £10.1billion last month – down from £12.4billion a year earlier and lowest figure for May since 2007. Income tax receipts jumped 5.3 per cent to £10.8billion, the best for four years, as rising wages and record high levels of employment drove revenues higher.

Combined with national insurance contributions, tax from earnings hit a record high for May of £19.6billion.

But the national debt topped an eye-watering £1.5trillion for the first time – a record 80.8 per cent of national income and £23,400 for every man, woman and child in the country. 

The figures underlined the task facing the Chancellor ahead of next month’s Budget as he battles to balance the books.

‘With a long way to go in order to restore the public finances to better health, a major fiscal squeeze is looming,’ analyst Paul Hollingsworth at Capital Economics said.

A Treasury spokesman said: ‘Our deficit reduction plan is working. We have more than halved the deficit, but at just under 5 per cent it is still one of the highest in the developed world.’