Belfast Telegraph

Thursday 28 August 2014

Government borrowing hits £14.5bn as budget deficit continues to widen

Government borrowing hit a higher-than-expected £14.5bn last month, official figures revealed.

The woes facing Britain's battered finances showed few signs of easing as the Office for National Statistics (ONS) confirmed the budget deficit widened by another £700m in June to £12.6 bn.

Last month's public sector net borrowing was £200m less than the £14.7bn seen a year ago, butwas more than the £13.5bn expected by analysts.

Figures excluding the temporary effects of State financial intervention showed borrowing rose to £15.2bn up from £14.9bn in June 2009.

The UK remained deep in the red as overall receipts rose by 4% in June — the weakest growth since January.

Spending rose 5% to £49.3bn, highlighting the scale of the challengeahead for the Chancellor in addressing the gaping deficit.

Net debt is now 56.1% of gross domestic product — far higher than the 47.7% last June.

The ONS said last month's budget deficit figure was the highest ever recorded for June.

Jonathan Loynes, at Capital Economics, said the borrowingnews put a “dent in hopes” that public finances were now on a clearly improving trend.

Recent figures had suggested the pace of borrowing growth was easing.

But June data was far worse than expected and the ONS also revised up borrowing for May.

Mr Loynes said there was now a risk the full-year deficit could overshoot the recent Budget forecast put forward by the Office for Budget Responsibility.

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