Government borrowing ends year on target Five more years of grinding austerity were in prospect on Tuesday after government borrowing ended the 2011-12 financial year in line with George Osborne's Budget estimates last month. In the 2011-12 financial year, the government borrowed £126bn, some 8.3 per cent of national income, bang in line with the forecasts from the Office for Budget Responsibility. Public sector net borrowing in March was £18.2bn, almost unchanged from a year earlier. With borrowing coming down from a peak of 11.2 per cent of national income in 2009-10, Britain's tax increases and spending cuts have reduced the deficit, but the decline in borrowing is slow and has another five years to run. In the first two years of austerity, tax rates have been increased substantially and capital spending has been slashed. The focus for the remaining five years is for social security spending and the costs of public services to be squeezed hard. The deep cuts to capital expenditure explain almost all of the reduction in government borrowing in 2011-12. Compared with a year earlier, the budget deficit - borrowing excluding net investment - fell marginally, from £98.7bn to £97.3bn. Public sector net debt stood at £1.022tn at the end of the financial year, 66 per cent of national income, having risen 5.5 percentage points over the financial year. Although the headline figures were in line with the OBR estimates, the Debt Management Office has reduced its estimate of gilt issuance in 2012-13 by £3.3bn because the central government element of public sector borrowing last financial year came in a little lower than expected. Positive revisions to the previous month's borrowing data helped the figures hit the OBR estimates, but economists on Tuesday fretted that the weakness of tax receipts in the most recent months - February and March - indicated a worsening trend. Samuel Tombs of Capital Economics said: "With the economic recovery continuing to stutter, we think it will become increasingly difficult for the government to meet its ambitious deficit reduction plans in the coming fiscal year." The OBR forecasts for borrowing were themselves revised significantly higher last November as the independent fiscal watchdog became much more pessimistic both about economic growth and Britain's capacity to expand its economy in the medium term. In the financial year just started, the pace of deficit reduction is set to slow as the Treasury believes the continued existence of the 50p income tax rate will encourage individuals to shift their income and consequent tax payments into 2013-14 when the highest rate falls to 45p. Excluding the effect of income tax changes and transfer of the Royal Mail pension fund on to the government books, the underlying rate of deficit reduction is relatively stable in 2012-13, with the focus of austerity shifting towards current government spending.