Page last updated at 13:12 GMT, Tuesday, 20 October 2009 14:12 UK

Record in public sector borrowing

Queues outside Bristol Job Centre
Rising unemployment has lowered tax revenues

The UK's public sector net borrowing reached £14.8bn last month - a high for September, official figures have shown.

But the figure from the Office for National Statistics (ONS) was slightly lower than economists had expected.

Net borrowing for the six months of the financial year so far now stands at £77.3bn - the worst figure for the April-to-September period on record.

The government expects borrowing to hit £175bn this year. Its overall debt now stands at £824.8bn, or 59% of GDP.

That includes about £142bn as a result of banking bail-outs.

Forecast revisions?

Economists had expected borrowing to come in at £15.3bn in September, but the £14.8bn was still a sharp increase on the £8.7bn borrowed in the same month last year.

The figures raise speculation that the government may have to revise its forecasts on borrowing.

"September's public finance figures were marginally better than expected, but still suggest that the chancellor will have to revise his projections for public borrowing higher in the forthcoming pre-Budget report," said Vicky Redwood from Capital Economics.

But Liam Byrne, chief secretary to the Treasury, said the figures were "broadly in line with our forecasts".

Unless the government demonstrates that it can tackle the deficit without damaging wealth-creating businesses, the recovery will be threatened
David Kern, British Chambers of Commerce

"Today's figures... reflect our action to lock in the recovery and get the economy growing again by the turn of the year," he said.

Shadow chief secretary to the Treasury, Philip Hammond, said the borrowing figures "underline the extent of Labour's debt crisis".

"A responsible government would act immediately to start reducing public spending and bring Britain's deficit down. Failure to act will risk interest rate rises, causing the recovery to falter and putting jobs at risk," he said.

The Liberal Democrats said the government needed a credible plan on public borrowing.

"The government must clearly identify what spending it intends to cut to bring the deficit under control otherwise it will have to be assumed it intends to squeeze budgets across the public sector hurting vital public services," said Vince Cable, the Liberal Democrat Treasury spokesman.

'Serious risks'

However, Brendan Barber, general secretary of the TUC, said that immediate spending cuts "would push the UK economy into a double-quick double-dip recession just when the rest of the world is recovering".

The British Chambers of Commerce (BCC) called on the government to ensure that the UK's international credit rating is not threatened.

"Unless the government demonstrates that it can tackle the deficit without damaging wealth-creating businesses, the recovery will be threatened, the deficit will worsen further, and the country would face serious risks of further declines," said David Kern, chief economist at the BCC.

The recession has continued to take its toll on tax revenues and push up social security spending.

Unemployment is still rising, albeit it at a slower rate, leading to a lower tax intake.

Figures released last week showed there are now 2.47 million people without a job in the UK.



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