Public borrowing soars to new record

Click to follow
Indy Politics

Public borrowing ballooned by a further £14.8 billion in September, official figures showed today.

The latest surge takes net borrowing to £77.3 billion for the six months of the financial year so far - the highest half-yearly figure since Office for National Statistics (ONS) records began in 1946.

The Treasury expects borrowing to reach a record £175 billion for the year as a whole as the public finances buckle under the impact of recession.

While September's borrowing is slightly lower than the £15.3 billion expected by the City, it is almost double the £8.7 billion seen a year earlier.

The Government also shelled out £5.9 billion in interest payments on its mounting debt pile - 43 per cent above the same month last year and the highest monthly payout on record, according to the ONS.

The nation's net debt now stands at £824.8 billion, representing 59 per cent of the UK's entire economic output - another new record.

The figures are likely to intensify the political row over the public finances which saw the main parties clash fiercely during the conference season.

Shadow Chancellor George Osborne has outlined plans to raise the retirement age and a pay freeze for 80 per cent of the public sector, while Prime Minister Gordon Brown also announced plans for £16 billion in asset sales last week.

Today's figures showed spending running well ahead of tax revenues with total current spending of £45.7 billion over the month compared with just £35.4 billion in receipts.

The recession has hit businesses while rising dole queues have also dented the tax take and forced more Government spending on unemployment benefits.

Net benefit payouts were up nearly 10 per cent on the same month last year to £13.8 billion, while the Government's VAT and income tax revenues were both down by more than 13 per cent on 12 months earlier.

Vicky Redwood, of Capital Economics, said September's figures were marginally better than expected, but still suggest the Chancellor will have to revise his projections for public borrowing higher in the forthcoming Pre-Budget Report.

"At this rate, borrowing still looks likely to reach over £200 billion, compared to Alistair Darling's £175 billion forecast," she said.

Shadow chief secretary to the Treasury Philip Hammond said: "These record borrowing figures underline the extent of Labour's debt crisis.

"A responsible Government would act immediately to start reducing public spending and bring Britain's deficit down.

"Failure to act will risk interest rate rises, causing the recovery to falter and putting jobs at risk."