Page last updated at 17:16 GMT, Monday, 20 October 2008 18:16 UK

UK borrowing hits a 60-year high

HM Treasury building
The government said it would keep spending to prevent a wider slowdown

The UK government borrowed a record amount last month, Office for National Statistics (ONS) data shows.

Public sector net borrowing hit 8.092bn in September, up from 4.775bn in the same period a year earlier, marking a record for the month.

The amount borrowed so far this financial year stands at 37.6bn - the highest since records began in 1946.

The government has said it will keep investing money into public works to prevent a recession.

Cutting spending or raising taxes to plug the gap in public finances would only clobber an already fragile economy
Hugh Pym, BBC economics editor

The BBC's economics editor Hugh Pym said that by any standards the latest reported levels of public sector borrowing were eye-watering.

"Even before a recession has developed - if indeed it does - the government has racked up a record amount of borrowing and it can only go higher as the economic downturn deepens," he said.

Record borrowing

Prime Minister Gordon Brown insisted Britain's economy remained in a strong position to weather the downturn.

The public finances are in a complete state and in much worse shape than a year ago
Ernst & Young Item Club

"The United Kingdom cannot insulate itself from this global downturn," he said.

"But with interest rates low and falling, inflation expected to come down over the next year, these underlying economic indicators - particularly interest rates - make us stronger than at any other previous downturn, " he added.

Conservative leader David Cameron said the government had to take responsibility for the country's economic woes.

"The government keeps saying - and the Prime Minister I think said it at least three times in his statement - this is a crisis from America, as if no-one in Britain has any responsibility for anything that went wrong," said Mr Cameron.

Liberal Democrat leader Nick Clegg said the government should over tax cuts for people on low and middle incomes.


On a net cash requirement basis the government borrowed 12.65bn last month, compared with a deficit of 8.72bn in the same period a year ago.

This was also more than expected; analysts had forecast that public borrowing would reach around 10.1bn in September.

The cumulative borrowing for the period from April to September of 37.59bn is up from the 21.46bn borrowed in the same period a year earlier, and represents the largest total for a six month period since records began in 1946.

The figures come a day after Ernst & Young Item's Club said the UK economy was already in a recession and would see the economy shrink by 1% next year, before growing by 1% in 2010.

In response to the latest figures the Item Club said: "The UK's public finances are in a complete state and in much worse shape than a year ago".

Figures later this week are expected to show that the UK economy shrank in the third quarter - the first contraction since 1992.

Chancellor Alistair Darling had forecast in his Budget statement in March that public sector public borrowing for the full financial year - up to April 2009 - would reach 43bn.

But the Item Club believes borrowing will reach 60bn in the financial year 2008-09, with a current budget deficit of 27 billion, "much higher than the government's own projection".

In light of this, the club said it was clear "substantial revisions will be necessary in the Pre-Budget Report".

Unemployment is already rising and forecast to continue doing so, which will will add further pressure on the government's finances.

And recent data has underlined the weakness in the housing sector; mortgage lending fell to its lowest level for more than three and a half years in September, according to the Council of Mortgage Lenders.

The UK and other governments recently took emergency steps to shore up the banking system in a bid to increase liquidity and stabilise the markets.

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