The government borrowed the smallest amount of money from markets in May since 2005, falling by £2bn, compared with last year when borrowing reached £5bn in May, according to the latest figures from the Office for National Statistics.

Borrowing in the first two months of the new financial year came in at £4.1bn lower than the same period in 2017, reaching £11.8bn. This figure is also the lowest seen in any year since 2007.

The deficit for the previous financial year, from April 2017 to March 2018, was £39.5bn, more than £6bn lower than the previous year and below previous estimates. The deficit was driven by spending on infrastructure and other investments, while the government was in surplus by £1.2bn on current budget spending, such as salaries, for the first time since 2001/02.

The figures for 2017/18 are £5.7bn lower than the March forecasts of the Office for Budget Responsibility (OBR), whose predictions are the basis for the government’s spending plans.

However, government’s lower borrowing levels will provide welcomed headroom after Prime Minister Theresa May announced this week that the NHS will be granted an additional £20.5bn annually.

The figures will allow chancellor Philip Hammond some “modest fiscal headroom” to increase spending on the NHS, said Invesco economist George Brown. However, the “large price tag” associated with the higher health spending makes it likely that tax promises from the conservative party manifesto will be dumped, Brown added.

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