Public borrowing hits record £152bn

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Indy Politics

The extent of Britain's financial woes was laid bare today as official figures confirmed annual public borrowing hit £152.8 billion - the highest since records began.

The grim record for public sector net borrowing came after the UK slumped into the red by another £23.5 billion in March, according to the Office for National Statistics (ONS).

But borrowing for the financial year to the end of March came within the Chancellor's lowered Budget forecast.

Excluding financial intervention, annual borrowing reached £163.4 billion, which was comfortably below Alistair Darling's latest prediction for £167 billion and far lower than his original £178 billion estimate.

Britain's public sector net debt is now a record 62 per cent of gross domestic product (GDP).

The budget deficit widened by £14.8 billion in March to take the gaping hole in public finances to an all-time record of £107.6 billion over the financial year, more than double the £49.7 billion recorded a year earlier.

Borrowing has soared amid the recession as unemployment and Government actions to help prop up the economy have taken their toll.

However, there were signs of further improvement in today's figures.

Total tax receipts rose 3.8 per cent in March, having now risen in four out of the last five months.

VAT receipts rose after the rate reverted back to 17.5 per cent in January as the Government's temporary reduction ended, while corporation tax increased by a hefty 51.4 per cent.

The ONS figures also showed borrowing was not as bad as first feared for the year to March, revising borrowing down by £2.5 billion for the first 11 months of the year.

However, March is a bad month for Government spending as departments rush to secure spending before the end of the financial year, particularly so this year given the General Election pressure.

The ONS data showed that spending rose by 10.6 per cent in March and by 6.8 per cent over the financial year.

While annual borrowing came in lower than the Chancellor's forecast, it is still a dire figure that confirms the magnitude of the task ahead for the government following the General Election.

And tomorrow's GDP data will give a further barometer of the health of the UK economy, capping a crucial week for economic indicators.

Earlier this week, inflation data gave Labour a headache when it revealed a far bigger than expected rise to 3.4 per cent in March.