BRITAIN SINKS EVER DEEPER INTO THE RED
UK PUBLIC borrowing reached a record high in October, according to official figures published yesterday, revealing the state of public finances to be much worse than many economists feared.
Borrowing ballooned by £11.4bn during October, the Office for National Statistics (ONS) said, around double the consensus forecast.
National debt has spiralled to £829.7bn – equivalent to more than 59 per cent of GDP. That compares to £695bn in October last year, 48 per cent of GDP.
The rise in borrowing piles further pressure on the government, which this week pledged to halve the deficit within four years.
The Treasury’s current forecast for public borrowing this year is £175bn but many economists now think Alistair Darling will have to revise his estimate.
The Centre for Economics and Business Research (CEBR) believes Darling will have to hike borrowing forecasts to £200bn for the year.
With businesses struggling in the grip of recession, the Treasury’s coffers have taken a hammering. Receipts from corporation tax were 25 per cent lower than the same month last year.
CEBR senior economist Charles Davis said: “October is usually a good month because of corporation tax receipts. But just when we think things might get better, they keep deteriorating.”
Shadow chancellor George Osborne described the public borrowing figures as “truly terrible” and said Gordon Brown had lost control of the public finances.
Tax receipts were £41bn for the month, down nine per cent compared to October last year.
Meanwhile, spending on social benefits such as unemployment benefits has risen. The government’s total current expenditure rose by 10 per cent to £48.6bn.
Davis said: “Some big policy decisions are going to have to be made to get this deficit under control.”
He added: “We would like to see commitments to control public spending but whether or not we will get that from this government remains to be seen.”
KPMG head of public sector Alan Downey said: “It is pretty clear the public finances are in a dire state. There are tough choices ahead. But it would be unrealistic to think we will get answers from this government about where the axe will fall.”