Belfast Telegraph

UK now £15bn in the red as borrowing at new high

The UK sank into the red by £15.9bn last month during the worst August for public sector borrowing on record, official figures have shown.

The bigger-than-expected figure left borrowing in the first five months of the financial year at £58.1bn, the Office for National Statistics said.

The release of the figure, which was higher than the £14.1bn a year ago, comes a month before Chancellor George Osborne sets out his austerity plans in the comprehensive spending review on October 20.

The independent Office for Budget Responsibility expects borrowing of £149bn for the financial year - down from £155bn in 2009-10.

Samuel Tombs, an analyst at Capital Economics, said August's public borrowing figure - the highest since records began in 1993 - dented hopes that the fiscal position is improving.

He said: "August's overshoot clearly casts some doubt on the ability of the Government to meet the June Budget projection of annual borrowing of £149bn on that measure."

The figures did show some signs of recovery, however, with tax receipts of £37.1bn - up £2.2bn on a year earlier. The tax take was up 6.3% on a year earlier.

There was also a downward revision to net borrowing for April to July this year by £2.7bn. This was largely due to a downward revision of central Government expenditure, and an upward revision of accrued receipts from the bank payroll tax, the ONS said.

The biggest upward factor in the figures was an 11% surge in spending on a year ago, above the running average of 6.5%.

Investec Securities economist Philip Shaw said: "If this pace is maintained for the remainder of 2010/11, net borrowing would total £146bn, some £3bn below official forecasts," he said.

Next month's figures on the public finances will be released on October 20, the same day as the Comprehensive Spending Review.

Mr Shaw added: "The UK is still four to five years from a position of fiscal sustainability, and this endpoint would be that much further away were it not for the extent of the Government's planned budgetary consolidation."