Public finances show biggest monthly deficit for August on record

The budget deficit widened to the biggest on record for August, data showed today, as public sector borrowing excluding financial sector interventions peaked at £14.41bn last month.

Borrowing rose from £14.46bn in August 2011, the Office for National Statistics said today, marking the highest August since records began in 1993.

A fall in corporation tax receipts and a rise in benefit payments were behind the jump.

It took borrowing in the fiscal year to date to £31bn, down from £48.44bn in the April-August period 2011.

The government had originally planned to eliminate the structural budget deficit by 2015 with a tough programme of spending cuts and tax rises.

Howard Archer, chief UK and European economist at IHS Global Insight, said today: "It is likely in the Chancellor's autumn statement that he will either have to acknowledge that he will be unable to start bringing down debt as a percentage of GDP by 2015/16 or announce further fiscal tightening measures."