The Government borrowed much less than expected last month, official figures showed, in a boost to hopes that the Chancellor will find room for tax cuts at the next election.

Public sector borrowing, excluding banks, rose by £7.8bn in December, according to the Office for National Statistics, which was less than the £14.1bn forecast by economists.

It was about half the borrowing made in the same month in 2022 and the lowest for the month borrowing since 2019.

It comes as Jeremy Hunt dropped the strongest hint yet that he is planning to unveil a major package of tax cuts at the Spring Budget.

The Chancellor revealed that Treasury officials had provided him with “clear” proof that countries with lower tax burdens enjoyed higher economic growth.

He will deliver his next Budget on March 6 and hinted there may be cuts in a pre-election Autumn Statement, saying he plans to put the UK on a long-term “path to lower taxes”.

Public sector net borrowing excluding banks stood at £119.1bn in the nine months to December, which was £11.1bn more than the same period last year, according to the Office for National Statistics.

The Treasury’s total debt stood at £2.68 trillion at the end of 2023, which was about 97.7pc of GDP.

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