Stay up to date with notifications from The Independent

Notifications can be managed in browser preferences.

Britain slumps another £10bn into the red

Pa,Holly Williams
Thursday 18 November 2010 14:08 GMT
Comments

Your support helps us to tell the story

From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.

At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.

The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.

Your support makes all the difference.

Britain slumped into the red by another £10.3 billion last month despite a leap in business tax and VAT revenues, figures revealed today.

Public sector net borrowing in October set a record high for the month and marked an increase on the £10.1 billion seen a year earlier, according to the Office for National Statistics (ONS).

The rise came in spite of signs that the recovery was boosting government tax take, with corporation tax revenues up 29% and VAT also higher as shoppers rushed to beat January's VAT hike to 20%.

Some economists had expected borrowing to fall year-on-year, with October traditionally seen as a strong month for taxes.

The figure, which excludes the impact of financial intervention by the Government, has taken borrowing in the financial year to date to £81.6 billion.

But the ONS revealed hefty downward revisions to borrowing in August and September, down to £14.1 billion and £15 billion respectively, which gives hope that the Government remains on track to come within the £149 billion forecast by the Office for Budget Responsibility for 2010-11.

The further borrowing in October saw Britain's budget deficit widen by another £7.1 billion last month.

Net debt is now £845.8 billion, which represents 57.1% of gross domestic product (GDP) - also a record for October.

Today's figures are likely to reinforce the Government's argument for slashing public sector spending, with the full scale of cuts announced last month.

While tax revenues are increasing and falling unemployment is helping reduce spending on jobless benefits, economists said the Government is battling against ever-increasing interest payments on its mammoth debt levels.

Figures for last month, which include financial intervention - which reduces overall borrowing due to profit contributions from the part-nationalised banks - was £9.8 billion in October, up on the £9.4 billion seen a year ago.

Experts said that while the amount borrowed in October was slightly more than expected, the significant downward revisions for recent months meant the year-to-date level was lower than forecast.

Howard Archer, chief economist at IHS Global Insight, estimated financial year borrowing would reach £145 billion - below Chancellor George Osborne's target.

The recovery and deficit-busting efforts will help bring down borrowing further, although interest payments pose a "serious problem", he warned.

Mr Archer said: "The breakdown of central government expenditure shows interest payments were up to £3.86 billion in October from £3.35 billion a year earlier."

A Treasury spokesman said UK finances were "out of the financial danger zone", but he added that today's borrowing figures "make clear exactly why we need to tackle the unprecedented borrowing the Government faces".

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in