The deficit narrowed to 11.1 billion pounds in September, based on the widely used measure of public borrowing which strips out some of the effects of Britain's bank bailouts.
That was down from 12.1 billion pounds in September 2012, the Office for National Statistics said on Tuesday,
Economists in a Reuters poll had forecast a deficit of 11.2 billion pounds.
Chancellor George Osborne's original plans to tackle Britain's overspending were set back by the financial crisis but he appears on track to meet or beat his latest targets.
The government is now aiming for a deficit of no more than 120 billion pounds or 7.5 percent of GDP this year, stripping out the effect of cash transfers from Royal Mail and the Bank of England.
For the first six months of the current tax year, the deficit on this measure totalled 56.7 billion pounds, down more than 9 percent compared with the same point in 2012. The figure was helped by a revision lower of August's deficit.
When the Conservative-led coalition came to power in May 2010, the deficit stood at 11 percent of annual economic output.
Osborne said earlier this month that a re-elected Conservative government would aim to wipe out Britain's budget deficit altogether by 2020 and use a surplus to pay down the national debt.
Osborne is due to announce a half-yearly update on Britain's budget plans and the latest fiscal forecasts on Dec 4.
In a sign of the recovery starting to help public finances, total cash receipts April and September rose to 265.3 billion pounds from 237 billion pounds a year earlier.
Britain's total net public debt, excluding the direct costs of bailing out the country's banks, is still much higher than before the financial crisis at some 1.21 trillion pounds or 75.9 percent of GDP, the highest on record.
(Reporting by William Schomberg and Christina Fincher)
Culled from Yahoo Politics UK
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