Britain's Conservative-led government met its debt-cutting goal for the past 12 months despite a surge in borrowing last month, though a rise in total debt above 1 trillion pounds and weak revenue growth highlight the struggle ahead.
Eliminating a record budget deficit created during the financial crisis is the central aim of Britain's Conservative/Liberal Democrat coalition, which took power in 2010.
But this long-term target is looking increasingly hard to meet, with official data on Wednesday likely to show the economy only just avoiding recession, and while governments across Europe are teetering as a result of harsh austerity measures.
The Office for National Statistics said on Tuesday that the government's preferred debt measure, public sector net borrowing excluding financial sector interventions, fell to 8.3 percent of GDP in 2011/12 from 9.3 percent in 2010/11 - in line with forecasts from the independent Office for Budget Responsibility.
This was despite greater than expected borrowing in March of 18.174 billion pounds, the highest March reading in two years and well above economists' forecasts.
We have very low interest rates in an environment where many European countries have higher interest rates. That's a reflection of the market confidence in the UK's debt reduction plan, finance minister George Osborne told parliament on Tuesday.
Nonetheless, the data will come as little comfort to Osborne, who has suffered weeks of criticism - even within his own ranks - after announcing budget measures in March that hit middle- and low-income Britons while cutting taxes for the very rich.
A poll in the Guardian newspaper found support for the Conservatives has slumped dramatically in the past month. The Labour opposition's rating has risen to 41 percent - its highest score on that poll since 2003 - while support for the Conservatives has fallen by 6 points to 33 percent.
Last month's Budget, as well as being botched and deeply unfair, failed to come up with the plan for jobs and growth Britain desperately needs right now, said Labour's finance spokeswoman Rachel Reeves.
Britain's economy has barely grown after the post-financial crisis recession, and growing pressure on household budgets from rising prices and weak wage growth threatens to undermine the government's hopes for a consumer-led upturn to offset the deep spending cuts that are yet to come.
Tuesday's data suggested lacklustre growth was denting tax receipts. Revenue in 2011/12 grew by just 3.9 percent - less than the OBR had forecast - and analysts warned that weak revenue growth could make it harder for the government to meet its debt reduction targets in coming years.
We expect that revenues will undershoot again in the 2012/13 year - and underlying fiscal improvement will stall - reflecting continued weakness in the economy, said Citi economist Michael Saunders.
So far investors have maintained faith in the government's austerity rhetoric, keeping interest rates on UK government bonds well below those of most of its European peers, and a development for which Osborne is keen to take credit.
But an uncertain growth outlook, as the euro zone debt crisis threatens Britain's biggest trading partner, could yet derail the government's attempts to reduce a deficit that exceeded 11 percent of GDP when it came to power.
Official data on Wednesday is expected to show the economy grew 0.1 percent in the first three months of this year after shrinking by 0.3 percent at the end of 2011, skirting the second quarter of contraction that would define a recession.
However, it will be a challenge for the economy to reach the meagre 0.8 percent growth target the government is banking on to reduce the deficit to 7.6 percent of GDP this fiscal year.
Tuesday's data showed borrowing in the 2011/12 fiscal-year total came in just below its 126 billion pound target at 125.974 billion pounds, but Britain's total debt burden rose to a record 1.0225 trillion pounds, equivalent to 66 percent of GDP.
Moreover, total government expenditure in 2011/12 rose by 2 percent on the year to 617.0 billion pounds, despite the first annual drop in departmental spending since 1955, due to the rising cost of servicing Britain's debt and higher benefits spending.
Another key factor supporting demand for British government debt - Bank of England purchases of gilts under its quantitative easing programme - meanwhile looks set to fade as the BoE appears unlikely to sanction further stimulus next month.
But investors may draw some comfort from the fact that the UK Debt Management Office decided to cut gilt issuance in the fiscal year by 3.3 billion pounds to 164.4 billion pounds as a result of the on-track public finances data.
(Reporting by Fiona Shaikh and David Milliken; Editing by Jeremy Gaunt)