Surprise jump in deficit as welfare spending goes up

 
Tim Wallace
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BORROWING unexpectedly doubled in February, official figures showed yesterday, as tax revenues dropped and welfare spending rose sharply.

The deficit on current spending hit £11.05bn last month and investment spending pushed net borrowing to £15.18bn – up from £8.88bn in the same month of 2011.

Excluding the bank bailouts, the national debt now stands at 63.1 per cent of GDP, up from 58.8 per cent a year ago and 63 per cent in January.

Over the financial year to date, borrowing stands at £109.86bn, down £8.93bn from £118.89bn last year.

Current spending rose £4.03bn on February last year to £52.53bn, with much of the increase coming from a £1.46bn rise in social benefits.

That takes spending in the financial year so far to £562.05bn, up £10.09bn on the £551.96bn seen in the first 11 years of the last financial year.

“The increase in “other current expenditure” likely reflects government departments using up spare capacity in their budgets before year-end,” said Nomura analyst Philip Rush, explaining the jump in spending.