After more than 15 years of borrowing to meet the costs of day-to-day services, such as health and pensions, the government has balanced the books.

Official figures revealed that last year the UK ran a £112m surplus on the current budget, the first since 2001-02.

Resolution Foundation director Torsten Bell said: The Chancellor will be happy. It’s the first current budget surplus in over 15 years.”

Hammond also hit his deficit target last year with £2.6bn to spare as annual borrowing fell to its lowest in more than a decade, the Office for National Statistics said. The budget deficit for the year to March of £42.6bn was £3.5bn lower than last year, and the lowest level seen since 2007. It was an improvement over last month’s official forecast of £45.2bn and the prediction from the Office for Budget Responsibility (OBR) 13 months ago of £58.3bn.

If borrowing continues to undershoot, the Chancellor will have more scope to spend on health and public sector pay, and the Prime Minister has raised the prospect of injecting up to £4bn into the NHS.

According to current forecasts, the Chancellor has £15.4bn of “fiscal headroom” for his goal of running a budget deficit of less than 2% of GDP in the year to March 2021.

Commenting on the deficit, Hammond said: “Thanks to the hard work of the British people, borrowing is the lowest in over a decade. Our economy is at a turning point, with debt starting to fall and people’s wages rising, as we build an economy that truly works for everyone.”

Borrowing last month falling by £800m to £1.3bn, compared to the same period last year.

However, there were warnings that the deficit could be revised upwards in the coming months, as the OBR predicts that local government spending will be higher than previously recorded.

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