By Jaimie Kaffash
18 December 2009
Public sector net borrowing for November was a record £20.3bn, official figures released today show.
The Office for National Statistics report shows that net borrowing was £3bn higher than in same month last year. This brought the total borrowing for 2009 to £106.4bn, which is £57.1bn higher than in the same period in 2008. The public sector net debt is now £844.5bn, which is 60% of gross domestic product.
Economists say that, although hitting record highs, this is consistent with forecasts made in April’s Budget and the Pre-Budget Report . Gemma Tetlow, senior research economist at the Institute for Fiscal Studies, said: ‘Extrapolating borrowing over the first eight months of this financial year, but adjusting for the estimated impact of policies which are expected to affect the relative timing of receipts and spending over the course of the year, suggests that borrowing for the year as a whole is almost exactly on course to meet the Pre-Budget Report forecast published last week of £177.6 bn.
‘This would still be the highest level of borrowing since the Second World War, but given the large uncertainties surrounding economic activity this year, the Treasury Budget 2009 forecast for borrowing this year, published back in April, looks on course to be remarkably accurate.’
Grant Thornton financial advisers warned that the public sector still faces the ‘full brunt’ of the recession. Stephen Gifford, the firm’s chief economist, also criticised Chancellor Alastair Darling for not detailing how he plans to reduce the debt.
‘While the chancellor used the Pre-Budget Report to set out a goal to reduce the size of public debt, his plan lacked any detail on where the cuts will fall. The only clarity so far is that frontline services will not be affected,’ he said.
‘A frank debate on the options is urgently required. Without this, there will remain a lack of confidence in the public finances and the UK economy. Consumer confidence fell this month and it will not take many other shocks to push us deeper into recession.’
18 December 2009
Public sector net borrowing for November was a record £20.3bn, official figures released today show.
The Office for National Statistics report shows that net borrowing was £3bn higher than in same month last year. This brought the total borrowing for 2009 to £106.4bn, which is £57.1bn higher than in the same period in 2008. The public sector net debt is now £844.5bn, which is 60% of gross domestic product.
Economists say that, although hitting record highs, this is consistent with forecasts made in April’s Budget and the Pre-Budget Report . Gemma Tetlow, senior research economist at the Institute for Fiscal Studies, said: ‘Extrapolating borrowing over the first eight months of this financial year, but adjusting for the estimated impact of policies which are expected to affect the relative timing of receipts and spending over the course of the year, suggests that borrowing for the year as a whole is almost exactly on course to meet the Pre-Budget Report forecast published last week of £177.6 bn.
‘This would still be the highest level of borrowing since the Second World War, but given the large uncertainties surrounding economic activity this year, the Treasury Budget 2009 forecast for borrowing this year, published back in April, looks on course to be remarkably accurate.’
Grant Thornton financial advisers warned that the public sector still faces the ‘full brunt’ of the recession. Stephen Gifford, the firm’s chief economist, also criticised Chancellor Alastair Darling for not detailing how he plans to reduce the debt.
‘While the chancellor used the Pre-Budget Report to set out a goal to reduce the size of public debt, his plan lacked any detail on where the cuts will fall. The only clarity so far is that frontline services will not be affected,’ he said.
‘A frank debate on the options is urgently required. Without this, there will remain a lack of confidence in the public finances and the UK economy. Consumer confidence fell this month and it will not take many other shocks to push us deeper into recession.’
