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Red September for UK's borrowing

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The UK sank into the red by £16.2bn last month during the worst September for public sector borrowing on record, official figures show.

The higher-than-expected figure was announced just hours before chancellor George Osborne was due to reveal his highly-anticipated spending review - a bout of public sector cuts aimed at slicing the nation’s budget deficit.

Today’s figures left the UK’s net debt at £842.9bn, the Office for National Statistics (ONS) said - a record 57.2% of GDP. Borrowing for the first six months of the current financial year now stands at £73.5bn, the ONS added.

At the time of June’s emergency budget, the independent Office for Budget Responsibility forecast borrowing of £149bn for the financial year as a whole - down from £155bn in 2009-10 - and forecast net debt to be 61.9% of GDP by the end of March.

Samuel Tombs, UK economist at Capital Economics, said current public borrowing would impede the government as it strived to hit the OBR forecasts and would raise further concerns over today’s spending review.

He said: “Admittedly, thanks to better than expected borrowing in prior months, this figure still leaves a cumulative borrowing total in the first six months of the fiscal year of £73.5bn, around £4bn below last year’s equivalent figure.

“But September’s overshoot casts further doubt on the ability of the government to meet the June Budget forecasts, and casts a shadow over the spending review.”

The month saw a 10% rise in government expenditure to £50bn in September, which the ONS said was driven by spending on defence and health budgets.

While there was a downward revision to net borrowing for April to August of £1.1bn due to lower-than-expected central government spending, there was an upward revision in the total borrowing for the last financial year of £400m.

Today’s figures did show some signs of recovery, however, with tax receipts of £38bn - up £2.7bn from a year earlier.

The ONS figures exclude the impact of financial interventions by the government, which reduce overall borrowing due to profit contributions from the part-nationalised banks.

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