Britain's Chancellor of the Exchequer Osborne talks with Germany's Finance Minister Schaeuble at a European Union finance ministers meeting in Luxembourg

Britain's government borrowing fell to the lowest level in four years last month, according the Office for National Statistics, as tax revenue in the struggling ecomomy appeared to outpace cuts in public spending.

The ONS said the government borrowing for the month totalled £12.8bn, around £700m lower than in the same month last year, taking the nation's current budget deficit to £11.2bn, a decrease of £400m from last year. The figure is the smallest September borrowing total since 2008. Economists had expected the September borrowing figure to reach £13.5bn.

Total public sector net debt was pegged at £1.065tn at month's end, equivalent to around 67.9 percent of total GDP.

The ONS reported UK retail sales rose 0.6 percent last month from a 0.1 percent August decline, and 2.5 percent from the same time last year. Both figures were stronger than analysts' expectations and, when paired with Wednesday's report of record high employment, could push the UK economy out of its steepest double-dip recession in at least a generation.

For the government's financial year that began in April, the ONS said public borrowing - excluding the cash needed for previously arranged support for the nation's financial sector - fell to £37bn from £62.4bn. That figure, however, is flattered by a £28bn transfer of assets from the Royal Mail's pension scheme in April.

The ONS says removing that figure and the gain from profits made by the Bank of England's Special Liquidity Lending Scheme, which closed earlier this year, would mean the government is around £4.9bn short of estimates for deficit reduction for the April to September period.