By Jaimie Kaffash
‘This would also lead to potential instability including a loss of confidence in the pound.'
20 October 2010
The government borrowed a record high of £16.2bn in September, public finance statistics show today.
The figures from the Office for National Statistics also show that total borrowing for the year – excluding the government’s interventions in the banking system – is £73.5bn, which is £3.8bn lower than in the same period last year. However, the public sector current budget excluding the financial interventions is still in deficit by £13.2bn - £1.5bn higher than at the same point last year.
The government has pledged to eliminate the structural deficit by the end of this Parliament. Chancellor George Osborne announced departmental budgets would be cut by an average of 19% in today’s Spending Review.
Professor Michael Ben-Gad, head of economics at City University London, said that ministers had no option but cut spending. ‘Unfortunately, the alternative is to allow the debt to continue to rise and hope that the economy will somehow grow fast enough to catch up and risk at the very least very high taxes to finance interest payments,’ he said.‘This would also lead to potential instability including a loss of confidence in the pound.'
