UK Public Sector Borrowing higher than expected in August

| September 21, 2011 | 0 Comments

The Office for National Statistics (ONS) has today revealed UK public sector net borrowing rose last month.

According to the ONS, public sector net borrowing came in at a higher than expected £15.9 billion in August - a rise of £1.9 billion from a year ago and represented the highest for the month of August since records began in 1993.

Since the start of the financial year in April, public sector net borrowing totals £52 billion - just 7% less than a year earlier.

Overall, public sector net debt stands at 61.4% of UK GDP (total economic output) - up from 55.3% this time last year.

The Government’s independent Office for Budget Responsibility (OBR) is expecting public sector net borrowing to come in at £122 billion for the current tax year – lower than the £143 billion borrowed in the previous tax year.

However, today’s figures will put further pressure on Chancellor George Osborne’s tough austerity measures but the Treasury maintains that spending plans are on track.

A spokesperson for the Treasury said: “These are challenging times, but despite economic growth being lower than the OBR’s forecast earlier this year, tax receipts have continued to grow and spending so far this year has grown at the rate the OBR forecast in the Budget.

“These figures also include a welcome and substantial downward revision to borrowing so far this year and to overall borrowing last year.”

The OBR estimates that the UK economy will grow by an optimistic 1.7% this year – however, this estimate was made in March and is widely considered out of date.

Yesterday, the International Monetary Fund (IMF) said the global economy has entered a “dangerous new phase” and slashed its growth forecast for the UK.

In its World Economic Outlook bi-annual report, the IMF said the UK economy will grow by 1.1% in 2011 compared with its last forecast of 1.7% in April.

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