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August borrowing climbs to £11.6bn

Britain's finances remained under pressure last month after figures showed borrowing reached £11.6 billion, an increase of £700 million on a year ago.

The Office for National Statistics (ONS) added that the figure - excluding the the effects of bank bail-outs - stood at £45.4 billion between April and August, which was an increase of £2.6 billion on 2013.

In March, the Office for Budget Responsibility said it expected borrowing on this measure to be 12% lower than in the previous year.

Today's figures have been restated to meet new EU accounting standards, with the changes meaning that Network Rail has been reclassified from private sector to central government and proceeds from 4G auctions no longer treated as a one-off windfall.

Economists said the changes did not fundamentally have an impact on the strength of the public finances, with the figures showing a similar picture to last month amid weakness in National Insurance contributions and income tax receipts.

Samuel Tombs, senior UK economist at consultancy Capital Economics, said the poor borrowing trend was almost entirely due to weak annual growth in income tax receipts, which he said was likely to be temporary.

He added: "April 2013's cut in the additional rate of income tax supported receipts in the early months of the last fiscal year, but this distortion will boost receipts later this fiscal year, as self-assessment taxes relating to that year are paid.

"In addition, average earnings growth should pick up soon now that slack in the labour market has declined.

"Accordingly, the Chancellor could still be spared the tough decision of announcing either further slippage of the fiscal plans or more austerity before May's general election."

Public sector net debt excluding public sector banks was £1.43 trillion in August, an increase of £96.7 billion compared with last year.

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