The UK
The
amount -was just £0.3bn lower than the previous year's total of £120.9bn.
The
government wants to eliminate the budget deficit by 2017-2018.
Treasury
Chief Secretary Danny Alexander said the government would continue with its
plan to cut borrowing, but Labour said the pace was "catastrophically off
course".
Borrowing
in March fell to £15.1bn from £16.7bn a year earlier, excluding interventions such
as bank bailouts, said the Office for National Statistics (ONS).
Meanwhile,
public sector net debt - the amount that the government has borrowed over
successive deficits - is now £1.2 trillion, or about 75.4% of GDP. The figures
are preliminary and may be subject to change, it said.
Below forecast
The
annual borrowing figure of £120.6bn excludes the effects of both the transfer
of the Royal Mail pension scheme to the government and gains from the Bank of
England's asset purchases for quantitative easing (QE).
Proceeds
from the 4G mobile licences auction and another payment from the central bank
in February boosted government coffers, said the ONS.
Interest
that the Bank of England earns on holding government debt as a result of its
so-called quantitative easing programme is transferred back to the Treasury.
The
Office for Budget Responsibility (OBR) had forecast that the deficit for the
2012-13 financial year would be £120.9bn, unchanged from the previous year.
Mr
Osborne has pushed for spending cuts as part of a wider plan to reduce the
deficit in order to protect the government's creditworthiness on international
markets.
Danny
Alexander admitted that the government's deficit reduction strategy was slower
than expected, but said that it must continue.
"There
is a collective agreement around the Cabinet table that we have to deal with
the deficit, that we have to continue the action necessary to get the nation's
finances back on the right track," he told BBC Radio 4's The World at One.
"Yes,
it is tough, yes, the road is harder and longer than we first forecast. The
commitment is unwavering to that. We are going to stick to the plan that we set
out because it is the right thing for this country."
But
shadow treasury minister Chris Leslie said: "At this rate of deficit
reduction, at less than a quarter of 1% a year, it would take 400 years to
balance the books.
"Now
remember," he added, referring to the government's earlier target,
"George Osborne promised and David Cameron promised that they'd balance
the books, totally - no more deficit - in two years' time by 2015. You can't be
more catastrophically off course than that."
Bigger picture
Last
week, Fitch became the second ratings agency to downgrade the UK UK
Also
last week, the IMF cut its growth forecast for the UK ,
and its chief economist, Olivier Blanchard, urged the UK
Rowena
Crawford, senior research economist at the Institute for Fiscal Studies, said:
"Whether borrowing is slightly lower or slightly higher in cash terms from
one year to the next is not of any direct economic importance. What is
important is the bigger picture."
While the deficit on the whole has fallen in
cash terms by almost 25% between 2009-10 and 2011-12, the poor economic
performance and subsequently weak government tax receipts mean that the deficit
was largely unchanged from its 2011-2012 level, she said.
David
Tinsley, chief UK
"The
substantive point is that tax revenues are very weak because the economy -
nominal GDP growth - has been very weak.
"The spending side looks better, the government seems to be
delivering on spending reductions but failing on getting growth and therefore
revenues, and that's why the fiscal position isn't improving. It's
flatlining," he added.