Monthly borrowing hits record £10bn

Click to follow
The Independent Online

Public borrowing hit £10 billion in April - a record for the month, official figures showed today.

The rise - up from £8.8 billion a year earlier - underlined the scale of the task ahead for new Chancellor George Osborne to tackle the UK's gaping deficit.

But the figure was not quite as bad as the £10.9 billion feared by the City.

The Office for National Statistics (ONS) also revised down borrowing for the 2009-10 year to £156.1 billion - although this is still a record high.

IHS Global Insight's Howard Archer said: "The good news for the new Chancellor is that the public finances data for April saw a continuation of the recent trend of slowing deterioration.

"The bad news for Mr Osborne is that the public finances remain horrible and that he has one hell of a job in front of him."

Total tax receipts were £2.8 billion ahead of the same month last year at £41.2 billion, helped by the economic recovery and VAT returning to 17.5%.

But spending was still £11 billion ahead of the tax take at £52.2 billion.

The Chancellor launched plans this week for an Office for Budget Responsibility (OBR) to give a "truly independent assessment" of the state of the nation's finances.

He will set out detailed plans for £6 billion in savings to cut the deficit on Monday.

A Treasury spokesman said: "It is welcome that borrowing has come in lower than expected for last year due to a windfall on tax receipts, but borrowing in April and for last year was still at record levels, which is why we need to act now to cut the deficit."

Capital Economics' chief European economist Jonathan Loynes said a "huge fiscal squeeze is still coming".

"The deficit is still very high by both historical and international standards and the forecasts for borrowing in future years are likely to rise significantly if, as is very likely, the new OBR takes a less rosy view of the outlook for the economy than the last government," he said.

The £156.1 billion net borrowing for last year is lower than the £167 billion forecasted in March's Budget, excluding the impact of financial interventions.

These have the effect of lowering net borrowing because actions such as share purchases to aid struggling banks are classed as inter-governmental cash transfers in accounting terms.