Tax yield down, welfare up, interest on debt up. The Black Hole is getting deeper and on top of that it looks as if Darling’s £175bn deficit this year is more likely to be £200bn - a forecasting error of £25bn (which in itself will attract an extra £1 bn every year in interest payments)
Christina
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TELEGRAPH 21.9.09
UK government borrowing hits record £77bn
Public borrowing in Britain ballooned to a record £77.3bn in first six months of the financial year - the highest half-yearly figure since the end of the Second World War.
The spike in national debt is £43.5bn higher than the same period a year ago and is the most the government has borrowed between April and September since records began in 1946, the Office for National Statistics said.
Alistair Darling, the Chancellor, has forecast record borrowing of £175bn for the year, but some economists believe he may have to revise his projections for public borrowing higher in the forthcoming Pre-Budget Report.
Vicky Redwood, of Capital Economics, said: "At this rate, borrowing still looks likely to reach over £200bn."
Borrowing for September hit £14.8bn, which while slightly below forecasts is still the worst reading for the month since records began in 1993.
Labour and the Conservative Party have clashed over how and when to cut the deficit, with David Cameron putting it as his top priority should the Tories win an election. Gordon Brown has claimed that quickly tackling the deficit will tip the economy into a deeper recession.
Today's figures showed that total debt rose to £824.8bn at the end of September, equivalent to 59pc of GDP - another new record. Excluding the cost of financial sector interventions, debt was £682.8bn or 48.9pc of GDP.
The Government paid out £5.9bn in interest payments on its mounting debt pile in September - 43pc above the same month last year and the highest monthly payout on record, the ONS said.
Spending running over the month was well ahead of tax revenues with total current spending of £45.7bn compared with just £35.4 billion in receipts.
Public finances have buckled under the cost of more people on benefits and sharply reduced tax revenues.
Net benefit payouts in September were up nearly 10pc on the same month last year to £13.8bn, while the Government's VAT and income tax revenues were both down by more than 13pc on 12 months earlier.
Peter Dixon of Commerzbank said: "We know that as we go foward the hole in the public finances is going to require quite a dramatic slashing of spending, a widening of the tax base or a significant increase in taxes.
"Neither of those things is going to be very postiive for growth going forward. We're going to have to pay the price for a number of years of fairly lax fisal policy." [Similar warning to that from Mervyn King -cs]
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