Public sector borrowing falls to £6.5bn

 

Chancellor George Osborne's deficit reduction plans were lifted today after it emerged borrowing fell by more than expected in October.

Public sector borrowing, excluding financial interventions such as bank bail-outs, fell to £6.5 billion, which is £1.2 billion lower than the previous year, and below the City's expectations of £6.8 billion.

Borrowing between April and September was also revised down by £1.7 billion.

The figures come a week before the Chancellor's autumn statement, when he is expected to announce a package of measures to help boost the UK's ailing economy amid criticism that his austerity measures have choked off the recovery.

On the same day, the Office for Budget Responsibility will update its forecasts for Government borrowing, with many economists expecting the body to admit that Mr Osborne will fail to eradicate the structural deficit by 2014/15 as previously planned.

Today's figures mean Government borrowing in the year since April stands at £68.3 billion, which is still in sight of its target of £122 billion in the financial year.

But there are increasing fears that the worsening state of the economy will scupper the deficit reduction plans by increasing the Government's benefits bill and lowering its tax income.

Prime Minister David Cameron admitted yesterday that controlling Britain's debt was "proving harder than anyone envisaged".

James Knightley, an economist at ING Bank, said the finances were better than expected and the Government's deficit reduction plan for the current financial year was "still achievable".

But he added: "The Government has been dropping clear hints that this borrowing forecast number is likely to be revised upwards next week because of much weaker than expected GDP growth.

"This suggests that the improvement in taxation revenues may moderate and that Government spending may not slow as much as hoped due to higher unemployment."

Fears are growing that the UK's economy will slip back into recession amid the squeeze in consumer spending, while the UK's exports markets are being hit by the eurozone debt crisis.

The better-than-expected figures in October were mainly driven by higher tax revenues, helped by the 20% rate of VAT.

The Government's net debt has risen to £966.6 billion, which is 62% of GDP, and is expected to break through the £1 trillion barrier in the coming months.

Mr Osborne briefed his ministerial colleagues on the borrowing figures at the regular weekly meeting of Cabinet at 10 Downing Street this morning.

Mr Cameron's official spokesman told reporters: "The message was that the figures this morning show that we are making progress in our plans to cut the deficit and that the difficult decisions we have taken mean that the UK is seen as a relative safe haven by the markets, but that we are not immune from the debt storm."

The spokesman added: "There was strong agreement that the Government needed to be completely committed to delivering on its plans firstly to deal with our debts - because that is fundamental if we want to keep interest rates low and protect the UK from the debt storm - and secondly to build the foundations for growth by pressing ahead with the necessary structural reforms to boost competitiveness and rebalance our economy in the medium term."

Mr Osborne made no forecasts at this morning's meeting of whether he will meet his fiscal mandate of eliminating the structural deficit by 2015/16 or his target of reaching that point in 2014/15, said the spokesman.

The Chancellor's prognosis is expected in his autumn statement on November 29, and he will brief Cabinet colleagues a day earlier in next week's Cabinet.

PA

Suggested Topics
Start your day with The Independent, sign up for daily news emails
News
peopleJonathan Ross has got a left-field suggestion to replace Clarkson
Sport
Lewis Hamilton secured his second straight pole of the season
f1Vettel beats Rosberg into third after thunderstorm delays qualifying
Arts and Entertainment
The teaser trailer has provoked more questions than answers
filmBut what is Bond's 'secret' that Moneypenny is talking about?
News
Johnny Depp is perhaps best known for his role as Jack Sparrow in Pirates of the Caribbean
peopleBut how did he break it?
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
Sport
football This was Kane’s night, even if he played just a small part of it
Travel
travel Dreamland Margate, Britain’s oldest amusement park, is set to reopen
News
news
News
Founders James Brown and Tim Southwell with a mock-up of the first ever ‘Loaded’ magazine in 1994
media
News
Threlfall says: 'I am a guardian of the reality keys. I think I drive directors nuts'
people
Voices
voices The group has just unveiled a billion dollar plan to help nurse the British countryside back to health
News
The Westgate, a gay pub in the centre of Gloucester which played host to drag queens, has closed
news
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Ashdown Group: Practice Accountant - Bournemouth - £38,000

£32000 - £38000 per annum: Ashdown Group: A successful accountancy practice in...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + Uncapped commission: SThree: Does earning a 6 figu...

Recruitment Genius: SEO Executive

£18000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: New Lift Sales Executive - Lift and Elevators

£35000 - £40000 per annum: Recruitment Genius: A challenging opportunity for a...

Day In a Page

The saffron censorship that governs India: Why national pride and religious sentiment trump freedom of expression

The saffron censorship that governs India

Zareer Masani reveals why national pride and religious sentiment trump freedom of expression
Prince Charles' 'black spider' letters to be published 'within weeks'

Prince Charles' 'black spider' letters to be published 'within weeks'

Supreme Court rules Dominic Grieve's ministerial veto was invalid
Distressed Zayn Malik fans are cutting themselves - how did fandom get so dark?

How did fandom get so dark?

Grief over Zayn Malik's exit from One Direction seemed amusing until stories of mass 'cutting' emerged. Experts tell Gillian Orr the distress is real, and the girls need support
The galaxy collisions that shed light on unseen parallel Universe

The cosmic collisions that have shed light on unseen parallel Universe

Dark matter study gives scientists insight into mystery of space
The Swedes are adding a gender-neutral pronoun to their dictionary

Swedes introduce gender-neutral pronoun

Why, asks Simon Usborne, must English still struggle awkwardly with the likes of 's/he' and 'they'?
Disney's mega money-making formula: 'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan

Disney's mega money-making formula

'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan
Lobster has gone mainstream with supermarket bargains for £10 or less - but is it any good?

Lobster has gone mainstream

Anthea Gerrie, raised on meaty specimens from the waters around Maine, reveals how to cook up an affordable feast
Easter 2015: 14 best decorations

14 best Easter decorations

Get into the Easter spirit with our pick of accessories, ornaments and tableware
Paul Scholes column: Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season

Paul Scholes column

Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season
Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

The future of GM

The greenhouses where Monsanto 'plays God' with the future of the planet
Britain's mild winters could be numbered: why global warming is leaving UK chillier

Britain's mild winters could be numbered

Gulf Stream is slowing down faster than ever, scientists say
Government gives £250,000 to Independent appeal

Government gives £250,000 to Independent appeal

Donation brings total raised by Homeless Veterans campaign to at least £1.25m
Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

The most borrowed book at Bank of England library? Oh dear

The book's fifth edition is used for Edexcel exams
Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

Cowslips vs honeysuckle

It's the hunt for UK’s favourite wildflower
Child abuse scandal: Did a botched blackmail attempt by South African intelligence help Cyril Smith escape justice?

Did a botched blackmail attempt help Cyril Smith escape justice?

A fresh twist reveals the Liberal MP was targeted by the notorious South African intelligence agency Boss