Government borrowing swells to new high

Author: By Holly Williams, Press Association

Public sector net borrowing in June saw the nation’s net debt soar to £798.8
billion, which is equivalent to a record 56.6 per cent of gross domestic
product (GDP), according to the Office for National Statistics (ONS).

June’s borrowing was £5.5 billion higher than the £7.5 billion seen a year
ago, which also marked a record for the month.

The ONS data revealed the impact of recession on tax receipts, with
corporation tax takings plunging by 14.1 per cent, VAT by 15.9 per cent and
income tax by 3.9 per cent.

But spending rose again as the Government sought to tackle the economic woes,
with social benefit outlays up 9.7 per cent to £13.3 billion as it pumped
more cash into unemployment benefit payouts.

Total Government outlay over June hit £49 billion, up from £44.2 billion a
year earlier, while total receipts fell 5.7 per cent to £35.5 billion.

Today’s figures paint a stark picture of UK public finances and come amid
mounting concern over borrowing levels.

Bank of England Governor Mervyn King recently highlighted concerns, branding
the Government’s borrowing levels “extraordinary”.

Chancellor Alistair Darling predicts net borrowing over the year as a whole
will hit £175 billion.

But economists fear it could reach as high as £190 billion this year as the
Government seeks to spend its way out of recession.

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