There has been a better-than-expected improvement in the UK's public finances, according to official figures.
Borrowing - excluding the effect of bank bailouts - was £6.8 billion in April, £2.5 billion lower than in the same month last year, according to the Office for National Statistics (ONS).
Public finances were bolstered by bumper VAT receipts as well as spending cuts.
It was the first set of monthly borrowing figures for the 2015/16 fiscal year as George Osborne targets a further reduction in the annual deficit. The Chancellor is to deliver his first all-Tory Budget, following the party's election victory, on July 8.
Martin Beck, senior economic advisor to the EY ITEM Club, said: "As it stands, it is not implausible that the Budget on July 8 will see a cut in the deficit forecast.
"This would certainly make life easier for the Chancellor in juggling his ambitions to achieve a Budget surplus by the end of the Parliament, while meeting the various tax and spending commitments made during the election campaign.
"All in all, it is looking like the most favourable backdrop to a Budget since 2007."
Today's figures showing a year-on-year fall of 27% in monthly borrowing was comfortably ahead of the 14% pencilled in for the financial year ahead by the Office for Budget Responsibility (OBR).
The OBR sees borrowing reduced to £75.3 billion for 2015/16. Revised figures show it was £87.7 billion in 2014/15, slightly higher than the initial estimate of £87.3 billion though still undershooting its target.
April's figures were helped by VAT receipts of £10.6 billion, up 3.4% year-on-year and the highest figure for April since records began in 1997.
Meanwhile debt interest payments for the month were 7%, or £400 million, lower as the cost of servicing inflation-linked bond debt fell, with inflation at record lows.
Income tax-related receipts rose 3.7% to £11.6 billion while spending on net social benefits fell 1.1% to £16.7 billion. An expenditure category mainly including departmental spending was 10%, or £4.1 billion, lower at £36.8 billion.
Underlying debt at £1.488 trillion was up from £1.484 trillion in March but as a proportion of gross domestic product (GDP) was flat at 80.4%. In April last year the debt was £1.404 trillion, or 78.9% of GDP.
Samuel Tombs of consultancy Capital Economics said the figures were "more good news on the current health of the UK's public finances"
But he added: "A major and painful re-intensification of the fiscal squeeze will still be required for the Government to obtain an overall budget surplus in this parliament.
"It is highly unlikely that this pace of spending cuts can be maintained in future months. Accordingly, the Chancellor is unlikely to have spare funds to dispense at the Summer Budget."
Howard Archer of IHS Global Insight said it was a "very good start" for plans to cut the annual deficit.
"However, there is obviously an awful long way to go, and much will obviously depend on how well the economy bounces back from the first quarter slowdown when GDP growth was limited to 0.3%," he added.
A Treasury spokeswoman said: "Today's figures show that our deficit reduction plan is working, with borrowing down £2.5 billion compared to a year ago.
"We have more than halved the deficit, but at just under 5% it is still one of the highest in the developed world.
"There is no shortcut to fixing the public finances so we have to continue with the hard work of identifying savings and making reforms necessary to finish the job and build a resilient economy."
ends
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article