Public Sector borrowing falls

The figure was slightly lower than the previous tax year's £120.9bn and the independent Office for Budget Responsibility's forecast.

Borrowing also fell in March - by £1.6bn on a year earlier to £15.1bn - as spending cuts across Government departments kicked in.

The totals exclude the cost of bank bailouts, cash transfers from the Government's quantitative easing programme and a boost from the Royal Mail pension assets.

Chancellor George Osborne is likely to welcome the figures after a difficult week in which his austerity programme was criticised by the International Monetary Fund. Fitch Ratings also became the second agency to strip Britain of its triple-A credit rating.

A Treasury spokeswoman said: "Though it is taking time, the Government is fixing this country's economic problems.

"The deficit is down by a third, a million and a quarter new private sector jobs have been created and interest rates are at near-record lows, benefiting households and businesses."

But Deutsche Bank's UK economist George Buckley said the UK's public finances remained a concern.

"We've seen another downgrade over the past week ... it's going to take a long time to get back to where the Government would like it to be in terms of the underlying fiscal deficit," he said.

The falls in borrowing - although "encouraging" - come after three years of austerity, he said, adding: "There's a long way to go yet."

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