The chancellor is expected to come under renewed pressure to offer a larger financial package of support to low-income families suffering from the cost of living crisis after the public spending deficit in April came in lower than expected. With the cabinet understood to be concerned about the government’s falling poll ratings as the cost of living crisis escalates, the government borrowed £18.6bn last month – lower than forecast and down by £5.6bn from a year ago, according to Office for National Statistics figures. The reduction in borrowing potentially hands Rishi Sunak further funds to ease the cost of living crisis, which has hit the living standards of those on low incomes the hardest. However, the improvement in borrowing figures masked weaker-than-expected tax receipts in April, revealing the impact of Britain’s slowing economy on the exchequer. Central government tax receipts of £70.2bn came in below a forecast by the Treasury’s independent forecaster, the Office for Budget Responsibility (OBR), of £72.3bn. The Treasury’s income was also flattered by one-off items that are unlikely to be repeated as a possible recession looms. Local authorities returned a £2.3bn surplus, larger than the £1.5bn anticipated by the OBR, and public corporations reported running a balanced budget, rather than a £3.7bn deficit. A survey of private sector activity this month found economic growth “slowed to a crawl” after a slump in the services sector. The S&P Global/Cips flash composite purchasing managers’ index (PMI), which gives a snapshot of business orders and sales, plummeted from 58.2 in April to 51.8 in May, much lower than the 56.5 forecast by City economists. Manufacturing output continued to grow modestly in May, but inflationary pressure, mostly from imported goods, remained intense and was likely to depress orders and output over the coming months, the survey found. Martin Beck, the chief economic adviser to the EY Item Club, said the cost of living squeeze on consumer spending and the end of pandemic-related spending by the government meant growth would slow further. “The latest set of flash PMIs signalled a significant loss of economic momentum. May’s results reinforce the expectation that GDP growth in the second quarter will slow significantly,” he said. Samuel Tombs, the chief economist at the consultancy Pantheon Macroeconomics, said it was likely the prospect of a slowdown in economic growth and a further weakening of tax receipts would limit the chancellor’s room for manoeuvre. “Nonetheless, opinion polls suggest that the Conservatives would win only 33% of the vote if a general election was held today, five percentage points less than Labour, so the pressure is mounting on Sunak to do more to improve his party’s chances of being re-elected in May 2024,” he said. “Accordingly, we continue to expect the chancellor to bring forward April 2023’s inflation-linked rise in the value of benefits to October, at a cost of £6bn, and to greatly increase the value of the warm homes discount this winter. Interest payments on the government’s borrowing were lower than forecast at £4.4bn last month, but are forecast to rise in June when Treasury loans linked to the retail prices index will show the full scale of the recent jump in inflation. The ONS said the April figures also included the £3bn cost of the recent council tax rebate, which offered £150 to many households across the UK to help with soaring energy bills. The impact on the public finances would be to increase borrowing this year from a likely £110bn to nearer £120bn, Tombs added. There was better news for Sunak from revised figures for the previous financial year, which showed borrowing for the year to March was revised down by £7.2bn to £144.6bn, though still above the £127.8bn predicted by the OBR. Sunak said: “While we are doing what we can to help families deal with rising prices, inflation is also pushing up our spending on debt interest – which is expected to reach £83bn this year. “We must take a balanced and responsible approach to support people now, while also not burdening future generations, and we’re on track to drive public debt down by 2024-25.” The government’s total debt pile, excluding public sector banks, was £2.35tn at the end of April to about 95.7% of gross domestic product (GDP).