These figures are horrific and hope those of my readers who persist in brushing aside the financial crisis as being something which “They” will sort out, will realise that all other issues pale into insignificance against the need for a strongly based goverrnment to stop the ultimate crash.
Christina
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THE TIMES
19.11.09
Britain's borrowing hits record £11.4 billion
Patrick Hosking, Financial Editor and Grainne Gilmore
The threadbare public finances were thrown back into the spotlight today as it was revealed the Government was forced to borrow £11.4 billion in October to meet its bills - the worst figure for the month since records began in 1946.
Tax receipts collapsed by £4.1 billion compared with October 2008 while spending was £4.5 billion greater as the recession took its toll on corporate profits and consumer spending while welfare payments surged.
Total public sector net debt grew to £829.7 billion, equivalent to 59.2 per cent of total national output, by the end of October. That compares to £695.1 billion and 48.6 per cent a year earlier.
The blow-out in borrowing - which was worse than the City had been bracing for - reduces the chances of Alistair Darling, the Chancellor, meeting his target to keep the Budget deficit to £175 billion this fiscal year. He is due to set out his plans in more detail in the Pre-Budget Report next month.
While the net borrowing figure for October was down on August and September, when it hit £14.1 billion and £14.9 billion respectively, it was poor because October is generally a benign month for the public finances. Net borrowing in October 2008 was just £100 million.
The Organisation for Economic Co-operation and Development (OECD), a leading economic think-tank, today urged the British Government to come up with a credible plan for cutting the massive public debt, and cut its growth forecast for the UK economy.
It said: "The consolidation announced by the government means that fiscal policy will be a drag on the economy from 2010 onwards. Once recovery takes hold, further consolidation is imperative as public debt, which was relatively modest before the crisis, is reaching very high levels."
The OECD expects the UK economy to shrink by 4.7 per cent this year, down from its forecast of a 4.3 per cent decline in June. However, it expects the country to emerge from recession in the final quarter of the year, and said that the economy would grow by 1.2 per cent next year, close to the Treasury's central forecast of 1.25 per cent.
The public sector current budget, which excludes public investment, worsened from a £2.2 billion surplus in October 2008 to a £7.7 billion deficit last month.
This fiscal year, public sector net borrowing has reached £86.9 billion, compared to £33.9 billion at the corresponding point last year.
The figures dented sentiment in the government bond markets, with gilt futures slipping as investors questioned whether was sufficient appetite to buy all the future bonds that will be necessary to keep the public finances ticking over.
In the last few months, the Bank of England has been a voracious buyer of gilts as part of its £200 billion quantitative easing programme. But there are concerns about demand for gilts once the Bank stops QE or puts it into reverse.
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