The UK government reduced the public deficit in the 12 months to the end of March, AFP reports citing official data, but the Middle East war risks triggering increases to borrowing.

The Office for National Statistics said the deficit fell to 4.3 per cent of gross domestic product in the Treasury’s 2025-26 fiscal year, the lowest level since 2019-20, or eve of the Covid pandemic.

The annual deficit had been 5.2pc of GDP in 2024-25, the ONS added in a statement.

“Borrowing was almost 20 billion ($27 billion) lower than in the previous financial year,” said ONS senior statistician Tom Davies, as higher tax receipts offset increased state spending.

“This is a bit of a cup half full moment for the government,” noted AJ Bell head of financial analysis, Danni Hewson.