The borrowing undershoot, if maintained, will allow Philip Hammond to spend more on priorities such as the NHS

Philip Hammond hit his deficit target last year with £2.6 billion to spare as annual borrowing fell to its lowest level in more than a decade.

The budget deficit for the year to March was £42.6 billion, £3.5 billion below 2017 and the lowest level since the year to March 2007, the Office for National Statistics said. The result even beat last month’s improved forecast by the Office for Budget Responsibility for £45.2 billion. This time last year the OBR was expecting the deficit, or net borrowing, to be £58.3 billion.

The borrowing undershoot, if it is maintained, will give the chancellor more room for spending on priority issues such as the health service and public sector pay. The prime minister has raised the prospect