Public borrowing to hit £178bn

Borrowing will hit £178 billion this year as the recession hammers the public finances, Chancellor Alistair Darling said today.

The 2009/10 estimate - equivalent to 12.6 per cent of the country's entire output - is higher than the £175 billion forecast in April's Budget, although below the predictions of many experts.

The revision comes after a deeper than feared recession.

The Chancellor had previously forecast a 3.5 per cent decline for the UK economy in 2009 - already a record - but now predicts a 4.75 per cent slump over the year.