Government likely to miss its target to cut the defecit
The Coalition government is on course to miss its full-year targets for tackling the huge budget deficit, official figures showed today, as public borrowing broke August records.
Public sector borrowing, excluding financial interventions such as bank bail-outs, hit £15.9bn in August, up £1.9bn on the same month a year ago and the highest figure for the month since records began in 1993, the Office for National Statistics (ONS) said.
Economists warned the Government that it is set to overshoot the full-year target set by the Office for Budget Responsibility (OBR) of £122bn if the current rate of borrowing continues.
The worrying figures were published as the Treasury denied speculation that it could rethink spending plans and pump another £5bn into the stalling economy.
Nida Ali, economic adviser to the Ernst -amp; Young ITEM Club, said: "The Government needs some very optimistic results in the coming months to meet this target and, given a further darkening of growth prospects, it will be no easy feat."
Chancellor George Osborne has repeatedly been forced to defend his tough austerity measures in the face of a deteriorating economic outlook, most recently after the International Monetary Fund (IMF) slashed its growth forecasts for the UK yesterday.
Opposition politicians, business leaders and unions have accused the Chancellor of choking off the economy with spending cuts which have gone too far and too fast.
Total borrowing in the first five months of the financial year now stands at £51.5bn after the ONS made a series of revisions, down £3.9bn on the same period the previous year.
The Government borrowed more after income tax receipts fell for the first time in the month and expenditure rose after a low figure in July.
The OBR's estimates are based on assumptions that the UK's economy will grow at 1.7% this year, but even the Chancellor has conceded this is too optimistic.
But the Treasury remained defiant and said total tax receipts were still growing while spending was meeting the OBR's targets.
A spokesman said: "These figures also include a welcome and substantial downward revision to borrowing so far this year and to overall borrowing last year."