Government borrowing fell to its lowest in a decade in May, handing Philip Hammond a welcome boost a day after the Chancellor restated his commitment to eliminating the deficit.

Public sector net borrowing, excluding public sector banks, fell to £6.7bn last month, according to the Office for National Statistics (ONS).

This was £0.3bn lower than the same month a year ago and the lowest May deficit since 2007. Economists had expected borrowing to edge down to £6.8bn.

The reduction in the deficit was helped by stronger VAT receipts, which rose to a May record, while income tax and national insurance revenues also climbed at a steady pace.

Stamp duty revenues from property sales jumped 45pc year-on-year. Transactions recovered after the introduction of a 3pc surcharge on landlords and second homeowners in April 2016.

Howard Archer, chief economic adviser to the EY ITEM Club, said the rise in VAT receipts last month reflected the "lagged impact of stronger retail sales in April as a result of the later Easter and warm weather".

It came as the ONS also revised down its estimate for borrowing in the previous fiscal year to £46.6bn.