Borrowing still a 'problem' for George Osborne

 

The underlying health of the public finances will remain problematic for the Chancellor despite an expected improvement in Government borrowing, experts warned today.

Public sector net borrowing, excluding financial interventions such as bank bailouts, is expected to drop tomorrow to £13.9 billion for September, compared to £14.4 billion in the same month last year.

A slight improvement in overall economic activity in September will have helped tax receipts despite mounting pressure on the public purse as Government spending, driven up by higher benefits, still outweighs tax receipts.

Howard Archer, chief UK and European economist at IHS Global Insight, said the Chancellor faces a "problematic" autumn statement in December as borrowing looks set to overshoot the £120 billion target for 2012/2013 by at least £15 billion.

He said: "The Chancellor will be desperately hoping that the UK can start showing sustained growth which would at least help the public finances improve over the coming months and help combat calls for easing back on the austerity."

The Chancellor is now widely expected to announce in his autumn statement that the Government will be unable to start bringing down debt as a percentage of GDP in 2015/16.

The chances of this happening were heightened last month after Bank of England Governor Sir Mervyn King effectively endorsed such a move - on condition the global economy was growing slowly.

If Mr Osborne sticks to the debt target, he will be faced with the unpopular decision of announcing potentially large tax rises and further spending cuts.

Government borrowing remained unchanged in August at £14.4 billion as total tax receipts increased 1.8% to £41.4 billion and total expenditure rose by 2.5% to £52.5 billion.

In the first five months of the financial year, the public finances were worse year-on-year due to economic contraction hitting tax revenues.

Stripping out the one-off impact of the transfer of £28 billion of assets from the Royal Mail's pension funds, public borrowing was £59 billion, up from £48.4 billion in the corresponding period in 2011/12.

PA

Start your day with The Independent, sign up for daily news emails
  • Get to the point
2015 General Election
May2015

Poll of Polls

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

Recruitment Genius: Plumber

£22000 - £25900 per annum: Recruitment Genius: The Company is expanding and th...

Recruitment Genius: Corporate Account Manager

£27000 - £30000 per annum: Recruitment Genius: A Corporate Account Manager is ...

Recruitment Genius: Chef de Partie

£7 per hour: Recruitment Genius: This award winning conference venues provider...

Recruitment Genius: Admin Assistant

£12000 - £15000 per annum: Recruitment Genius: An expanding Insurance Brokerag...

Day In a Page

Revealed: Why Mohammed Emwazi chose the 'safe option' of fighting for Isis, rather than following his friends to al-Shabaab in Somalia

Why Mohammed Emwazi chose Isis

His friends were betrayed and killed by al-Shabaab
'The solution can never be to impassively watch on while desperate people drown'
An open letter to David Cameron: Building fortress Europe has had deadly results

Open letter to David Cameron

Building the walls of fortress Europe has had deadly results
Tory candidates' tweets not as 'spontaneous' as they seem - you don't say!

You don't say!

Tory candidates' election tweets not as 'spontaneous' as they appear
Mubi: Netflix for people who want to stop just watching trash

So what is Mubi?

Netflix for people who want to stop just watching trash all the time
The impossible job: how to follow Kevin Spacey?

The hardest job in theatre?

How to follow Kevin Spacey
Armenian genocide: To continue to deny the truth of this mass human cruelty is close to a criminal lie

Armenian genocide and the 'good Turks'

To continue to deny the truth of this mass human cruelty is close to a criminal lie
Lou Reed: The truth about the singer's upbringing beyond the biographers' and memoirists' myths

'Lou needed care, but what he got was ECT'

The truth about the singer's upbringing beyond
Migrant boat disaster: This human tragedy has been brewing for four years and EU states can't say they were not warned

This human tragedy has been brewing for years

EU states can't say they were not warned
Women's sportswear: From tackling a marathon to a jog in the park, the right kit can help

Women's sportswear

From tackling a marathon to a jog in the park, the right kit can help
Hillary Clinton's outfits will be as important as her policies in her presidential bid

Clinton's clothes

Like it or not, her outfits will be as important as her policies
NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders