By David Williams
22 April 2010
Public sector borrowing had grown to £163.4bn by the end of the 2009/10 financial year, official data show today.
The record figure – adjusted to take the banking bail-out into account – is substantially higher than 2008/09’s £96.5bn figure but lower than last month’s Budget prediction of £167bn.
The figures, published by the Office for National Statistics, show the unadjusted Public Sector Net Borrowing figure stands at £152.8bn. Net borrowing for March hit £23.5bn, while net debt reached £890bn, compared with £742.3bn last year.
Tax receipts fell compared with 2008/09, down to £469.2bn from £495.4bn – with the biggest losses being registered on taxes on income and wealth. Receipts for March were up compared with the same month last year, from £38.4bn to £39.8bn. The modest increase can be attributed to a rise in receipts from production taxes.
But expenditure has continued to rise – up £5bn in March alone, and standing at £573.4bn for 2009/10, compared with £536.8bn last year.
Rowena Crawford, research economist at the Institute for Fiscal Studies, said: ‘Chancellor Alistair Darling will doubtless be pleased that he looks to have borrowed £3.1bn less last year than he predicted in the Budget a month ago.
‘The deficit of £163.4bn is still the highest level of borrowing as a share of national income since the Second World War. Reducing borrowing to acceptable levels will be the biggest domestic policy challenge for whoever forms the next government.
‘All three main UK parties agree that public spending cuts should bring about the majority of the reduction in borrowing, but none have provided anything like enough detail of where the axe would fall.’
Clive Sparrow, director of the government advisory team at consultancy firm Grant Thornton, said: ‘Urgent and focused action will be needed in three key areas to reduce this level of borrowing.’ A combination of incentives for the private sector, spending cuts and measures to increase the productivity of public services would be needed to avert long-term damage to the UK economy.
