The Government has reduced its stake in Lloyds Banking Group to below 8 per cent as it continues progress towards fully privatising the bailed out lender. Taxpayers had owned 43 per cent at the height of the financial crisis in 2009.

UK Financial Investments, which manages the Government’s stake in Lloyds, says it has now recouped £17bn of the £20.3bn bailout but the latest sale was at a lower price than the Government originally paid.

UKFI’s figure also does not take into account the interest paid on the billions in debt the Government used to buy its stake, the National Audit Office has noted.

UKFI announced last month it would resume sales which were suspended in January because of market volatility.

Chancellor Philip Hammond said: “Selling our shares in Lloyds Banking Group and making sure that we get back all the cash taxpayers injected into it during the financial crisis is one of my top priorities as Chancellor.”

In October the Government controversially ditched plans for a share sale to the public, opting instead to offer the stake to institutional investors.

Last month Lloyds announced a 15 per cent fall in profits as it set aside a further £1bn for compensation claims for mis-sold of payment protection insurance, bringing its total bill for the scandal to £17bn.

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A Lloyds spokesman said: “Today's announcement shows the further progress made in returning Lloyds Banking Group to full private ownership and enabling the taxpayer to get their money back.

“This reflects the hard work undertaken over the past five years to transform the group into a simple, low-risk and customer-focused bank that is committed to helping Britain prosper.”