Public borrowing at highest since 1946
Further concern for the economy come in the wake of figures from the Office for National Statistics (ONS) which have revealed that public sector net borrowing soared to a record high in September.
Net borrowing soared by £8.1 billion, a record for the month, which leaves borrowing between April and September at £37.6 billion and the highest since records began in 1946.
The figures were described as ‘dreadful’ by analysts and are announced just one day after Chancellor Alistair Darling said he was ready to spend his way out of a recession.
Back in March, in his budget, Mr Darling forecast a shortfall for the full 2008/09 year to next March of £43 billion. However, the figures from the ONS show that this has almost been reached at the half-way stage.
Mr Darling will have to revise the figure higher in next month’s pre-budget report with many economists expecting him to be forced to borrow £60 to £70 billion over the full-year.
However, as a recession will result in higher welfare bills as unemployment soars, borrowing could rise above £100 billion in coming years according to City economists.
The news of public borrowing come after a forecast published by the Ernst & Young Item Club claims that Britain is now in a recession that will last for 12 months, with only a weak recovery in 2010.
Peter Spencer, the chief economist at Ernst & Young, said the economy fell sharply in the previous quarter and will shrink for three more quarters before bottoming out in the latter half of 2009.
Britain has been on the brink of recession since the end of June, when the economy came to a standstill with official growth at zero.
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