Labour's massive tax hikes had finally started bringing down Government borrowing - but only before the Middle East crisis hit.

Official figures showed another £132billion was borrowed in the 12 months to the end of March - £19.8billion lower than the previous financial year.

Hugely increased revenues from Rachel Reeves' tax raids partly offset a spending bonanza, including on more benefits and public sector pay settlements.

However, the picture is likely to shift dramatically in the coming months with the Iran war expected to fuel inflation and squash economic growth.  

The ONS said borrowing fell to £12.6billion in March, down by £1.4billion year-on-year and the lowest borrowing for the month since 2022 - although slightly higher than analysts had anticipated.

The full-year borrowing was below the £132.7billion forecast by the Office for Budget Responsibility (OBR), and the lowest since 2022-23.

Central government tax receipts increased by £54.7billion to £845.4 billion over the 12 months.

That included £34.6billion more income tax, £8.8 billion VAT and £5.4billion of corporation tax.

The notorious hike in employer National Insurance, which took effect in April last year, saw social contributions rise by £33billion to £206.8billion.

Meanwhile, central government departmental spending on goods and services increased by £27.9billion to £461.6billion, driven by pay rises and inflation.

Benefits paid by central government increased by £20.7billion to £327.3 billion, largely due to upratings - including to state pensions.

The interest on the Government's debt mountain was also up by £12.2billion to £97.6billion, reflecting more anxiety in markets.

Tom Davies, ONS senior statistician, said: 'Borrowing was almost £20 billion lower than in the previous financial year, and broadly in line with the OBR's forecast.

'As a proportion of gross domestic product, it fell to its lowest level since 2019-20, just prior to the pandemic.

'Although spending has risen this financial year, this was more than offset by increased receipts.

'The figures also show borrowing for last month on its own was 10 per cent less than in March last year.'

Since becoming Chancellor in July 2024, the OBR watchdog's historical database shows Ms Reeves has imposed an astonishing £75billion a year of extra tax on Britons.

Much of that has gone on spiralling welfare costs, with Labour MPs forcing the government to abandon efforts to curb spending and scrap the two-child benefits cap.

The staggering tally makes her the biggest tax-raising Chancellor in the last six decades, far ahead of her nearest competitor for the dubious distinction.

That was fellow Labour politician Gordon Brown, whose fiscal statements added up to an extra £62.1billion.

Figures released alongside the Spring Statement in March showed the tax burden is on track to reach never-before seen mark of 38.5 per cent of GDP in 2030-31. 

Treasury chief secretary James Murray said: 'Our deficit is down £19.8billion because of our plan to cut borrowing. In a volatile world the decisions we are taking are the right ones to keep costs down, take back our energy security and cut borrowing and debt.'