The large fall in public borrowing in the 2016-17 fiscal year could suggest that the process of deficit reduction is almost complete and that the Conservatives can keep their pledge not to raise the rates of the main tax types. However, progress on deficit reduction has been slower than planned a few years ago. And a large part of the fall in borrowing last year was due to temporary factors which will be unwound this year. Accordingly, more austerity will probably be required to bring the deficit down further and the Conservatives would be wise to open up the option of raising taxes to achieve this.
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