The UK government borrowed a lower than expected £11.6billion in December, providing a welcome boost for the chancellor after last year's Budget.
The Office for National Statistics said the government borrowed £11.6billion last month, down £7.1billion from the previous year.
Government income and spending was below the £13billion forecast by economists, and was 38% lower than in the same month a year earlier.
The narrower deficit was largely due to an increase in revenues following the government’s decision to increase a tax on employment from April.
The latest figures come after Rachel Reeves set out a series of tax increases in her November Budget to increase the buffer she has to meet fiscal rules.
“Borrowing in December was substantially down on the same month in 2024, as a result of receipts being up strongly on last year, whereas spending is only modestly higher,” said ONS senior statistician Tom Davies.
“However, across the first nine months of the financial year as a whole, borrowing was fractionally lower than in the same period in 2024,” he added.