Record October rate for UK public sector borrowing

20th November 2009

The UK's public sector net borrowing reached £11.42bn last month, official figures have shown.

The figure was the highest for the month of October since records began in 1993 and was much higher than economists had expected.

The ONS said public sector net debt as a percentage of gross domestic product (GDP) totalled 59.2% in October, also the highest since records began.

The Treasury said it expected the figures to start improving soon.

The figures were still broadly in line with government forecasts that borrowing would hit £175bn this year, it said.

But according to Gemma Tetlow, a senior research economist at the Institute for Fiscal Studies, it is too early for the government to make any firm predictions.

"With five months of the financial year left to run, there remains considerable uncertainty about the final outcome," she said.

The figures are the last to be released before chancellor Alistair Darling delivers his Pre Budget Report on 9 December.

At the end of October, public sector net debt stood at £829.7bn, which includes about £142bn as a result of banking bail-outs.

The government also stressed that tax receipts would improve as the economy recovered around the turn of the year and a cut in value-added tax was reversed.

October is normally a strong month for corporation tax receipts, but these have been hit hard by the recession.

In the first seven months of this year, public sector borrowing has come in at £87bn, as against £34bn in the same period of 2008.

The recession has continued to take its toll on tax revenues and push up social security spending.

Unemployment is still rising, although at a slower rate, leading to a lower tax intake.

Recent figures show there are now 2.46 million people without a job in the UK.

Source: BBC News