Osborne: I will miss target by £5bn

Chancellor George Osborne today admitted he would miss his annual borrowing target by £5 billion but said the public finances would be less badly hit than expected by disappointing income tax receipts.

Mr Osborne also said forecasts for future years had been revised up, meaning that public finances were "in a marginally stronger position" than expected at the Budget in March.

Meanwhile gross domestic product (GDP) growth for this year was revised up as expected from 2.7% to 3%, and for next year from 2.3% to 2.4%.

At the time of the Budget, public sector borrowing had been expected to fall to £86.4 billion for the current financial year, but today's official forecasts have revised the figure up to £91.3 billion.

The Treasury has been hit by weaker-than-predicted income tax receipts despite growth beating expectations and record jobs growth - with the shortfall blamed on the prevalence of low-income and part-time roles.

But the latest outlook for 2014/15 borrowing from the Office for Budget Responsibility (OBR) is not as bad as the prediction by some experts that it would miss the previous target by £9 billion.

Mr Osborne said this was partly due to a £4 billion a year saving on welfare and public service pensions because of lower inflation and more people in work, and revisions to national accounts which boosted the impact of spending cuts.

Meanwhile the interest being paid on the national debt would be £16 billion lower, showing "the value of our fiscal credibility around the world".

Borrowing for 2015/16 is expected to fall to £75.9 billion, worse than the £68.3 billion previously expected.

But the outlook for 2016/17 of a £40.9 billion shortfall is better than the £41.5 billion previously set out, while for 2017/18 expected borrowing is likely to be £14.5 billion, an improvement on the previously pencilled-in £15.8 billion.

Public finances are still expected to be in surplus by 2018/19, by £4 billion, slightly ahead of the previous forecast of £3.7 billion. A surplus of £23 billion is expected for 2019/20.

Meanwhile, despite an increase in growth forecasts for this year and next, GDP figures were revised downwards in coming years. For 2016 this has been cut from 2.6% to 2.2%, for 2017 from 2.6% to 2.4%, and for 2018 from 2.5% to 2.3%.

Mr Osborne said the latest forecasts showed the UK was the fastest growing of any major advanced economy in the world, compared with his first Autumn Statement four years ago with "an economy in crisis".

He told MPs: "Today, against a difficult global backdrop, I can report higher growth, lower unemployment, falling inflation, and a deficit that is falling too."

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