Philip Hammond and Boris Johnson, the foreign secretary, leave No 10 yesterday. The chancellor could be in a position to ease austerity in November’s budget

A faster-than-expected fall in government borrowing has handed the chancellor a windfall of more than £10 billion to support public services and infrastructure and help students and young homebuyers.

Official figures show that the deficit dropped to its lowest August level in a decade as VAT receipts hit record highs and day-to-day spending by the state declined.

If present trends persist, economists said that borrowing for the whole of 2017-18 could be £10 billion less than projections in March. Capital Economics said that the undershoot — below the official £58.3 billion budget deficit forecast — could reach £13 billion, giving a boost to Philip Hammond when he delivers the budget on November 22.

John Hawksworth, chief economist at PWC, said lower borrowing would give Mr