Image caption Chancellor George Osborne has been under pressure to change the course of his austerity plan

The UK government borrowed £120.6bn in the financial year to April 2013, slightly lower than the amount it borrowed the previous year.

The amount -was just £0.3bn lower than the previous year's total of £120.9bn.

The government wants to eliminate the budget deficit by 2017-2018.

Treasury Chief Secretary Danny Alexander said the government would continue with its plan to cut borrowing, but Labour said the pace was "catastrophically off course".

Borrowing in March fell to £15.1bn from £16.7bn a year earlier, excluding interventions such as bank bailouts, said the Office for National Statistics (ONS).

Meanwhile, public sector net debt - the amount that the government has borrowed over successive deficits - is now £1.2 trillion, or about 75.4% of GDP. The figures are preliminary and may be subject to change, it said.

The chancellor's fans will say: 'I told you so.' And most economists will say: 'So what?'

Below forecast

The annual borrowing figure of £120.6bn excludes the effects of both the transfer of the Royal Mail pension scheme to the government and gains from the Bank of England's asset purchases for quantitative easing (QE).

Proceeds from the 4G mobile licences auction and another payment from the central bank in February boosted government coffers, said the ONS.

Interest that the Bank of England earns on holding government debt as a result of its so-called quantitative easing programme is transferred back to the Treasury.

The Office for Budget Responsibility (OBR) had forecast that the deficit for the 2012-13 financial year would be £120.9bn, unchanged from the previous year.

Tax revenues are very weak because the economy has been very weak David Tinsley, BNP Paribas chief UK economist

Mr Osborne has pushed for spending cuts as part of a wider plan to reduce the deficit in order to protect the government's creditworthiness on international markets.

Danny Alexander admitted that the government's deficit reduction strategy was slower than expected, but said that it must continue.

"There is a collective agreement around the Cabinet table that we have to deal with the deficit, that we have to continue the action necessary to get the nation's finances back on the right track," he told BBC Radio 4's The World at One.

"Yes, it is tough, yes, the road is harder and longer than we first forecast. The commitment is unwavering to that. We are going to stick to the plan that we set out because it is the right thing for this country."

But shadow treasury minister Chris Leslie said: "At this rate of deficit reduction, at less than a quarter of 1% a year, it would take 400 years to balance the books.

"Now remember," he added, referring to the government's earlier target, "George Osborne promised and David Cameron promised that they'd balance the books, totally - no more deficit - in two years' time by 2015. You can't be more catastrophically off course than that."

Bigger picture

Last week, Fitch became the second ratings agency to downgrade the UK's rating from the top notch level of AAA. Moody's had downgraded the UK's rating in February.

Also last week, the IMF cut its growth forecast for the UK, and its chief economist, Olivier Blanchard, urged the UK to rethink its austerity policy in the face of continuing weakness in the economy.

Rowena Crawford, senior research economist at the Institute for Fiscal Studies, said: "Whether borrowing is slightly lower or slightly higher in cash terms from one year to the next is not of any direct economic importance. What is important is the bigger picture."

While the deficit on the whole has fallen in cash terms by almost 25% between 2009-10 and 2011-12, the poor economic performance and subsequently weak government tax receipts mean that the deficit was largely unchanged from its 2011-2012 level, she said.

David Tinsley, chief UK economist at BNP Paribas, said: "There's a small crumb to be had from the fact that borrowing is less than last year, but really that's a political point not an economic one.

"The substantive point is that tax revenues are very weak because the economy - nominal GDP growth - has been very weak.

"The spending side looks better, the government seems to be delivering on spending reductions but failing on getting growth and therefore revenues, and that's why the fiscal position isn't improving. It's flatlining," he added.