Borrowing higher than expected at £11.4bn

Author: By Russell Lynch, Press Association

The record rise for the month takes public sector net borrowing for the
financial year so far to £86.9 billion, the Office for National Statistics
(ONS) said.

The gloomy figures come a day after the Government unveiled a Fiscal
Responsibility Bill – putting plans to halve the UK’s deficit within four
years on a statutory footing.

October is usually a strong month for the public finances due to corporation
tax revenues, but the depth of the recession has hammered the Treasury’s tax
take.

The figures showed a record 13th successive month of declining current
receipts – down 9 per cent to £41 billion – but spending on factors such as
unemployment benefits has risen.

This has pushed up the Government’s total current expenditure to £48.6
billion, while net debt has reached £829.7 billion – £134.6 billion higher
than a year ago and equivalent to more than 59 per cent of GDP.

The Government says its new Bill demonstrates its commitment to putting the
public finances in order, but the plans were lashed by Conservative leader
David Cameron, who labelled it a “complete con”.

Public borrowing is already forecast by the Treasury to reach £175 billion
this year but the figures could have to be revised higher by Chancellor
Alistair Darling in December’s pre-budget.

This comes after the shock initial estimate of a 0.4 per cent decline in
output between July and September when the economy was finally expected to
pull out of recession.

Bank of England Governor Mervyn King last week called for a “credible plan” to
restore the public finances as he said the UK had “only just started” down
the road to recovery.

And fellow rate-setter Andrew Sentance warned this week: “It is likely to take
five years or maybe more to get the current fiscal deficit down to more
comfortable proportions.”

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