UK borrowing hits a 60-year high

The UK government borrowed a record amount last month, Office for National Statistics (ONS) data shows.

Public sector net borrowing hit £8.092bn in September, up from £4.775bn in the same period a year earlier, marking a record for the month.

The amount borrowed so far this financial year stands at £37.6bn - the highest since records began in 1946.

The government has said it will keep investing money into public works to prevent a recession

Record borrowing

Prime Minister Gordon Brown insisted Britain's economy remained in a strong position to weather the downturn.

The United Kingdom cannot insulate itself from this global downturn," he said.

"But with interest rates low and falling, inflation expected to come down over the next year, these underlying economic indicators - particularly interest rates - make us stronger than at any other previous downturn, " he added.

Conservative leader David Cameron said the government had to take responsibility for the country's economic woes.

"The government keeps saying - and the Prime Minister I think said it at least three times in his statement - this is a crisis from America, as if no-one in Britain has any responsibility for anything that went wrong," said Mr Cameron.

Liberal Democrat leader Nick Clegg said the government should over tax cuts for people on low and middle incomes.

Slowdown

On a net cash requirement basis the government borrowed £12.65bn last month, compared with a deficit of £8.72bn in the same period a year ago.

This was also more than expected; analysts had forecast that public borrowing would reach around £10.1bn in September.

The cumulative borrowing for the period from April to September of £37.59bn is up from the £21.46bn borrowed in the same period a year earlier, and represents the largest total for a six month period since records began in 1946.

The figures come a day after Ernst & Young Item's Club said the UK economy was already in a recession and would see the economy shrink by 1% next year, before growing by 1% in 2010.

In response to the latest figures the Item Club said: "The UK's public finances are in a complete state and in much worse shape than a year ago".

Figures later this week are expected to show that the UK economy shrank in the third quarter - the first contraction since 1992.


Chancellor Alistair Darling had forecast in his Budget statement in March that public sector public borrowing for the full financial year - up to April 2009 - would reach £43bn.

But the Item Club believes borrowing will reach £60bn in the financial year 2008-09, with a current budget deficit of £27 billion, "much higher than the government's own projection".

In light of this, the club said it was clear "substantial revisions will be necessary in the Pre-Budget Report".

Unemployment is already rising and forecast to continue doing so, which will will add further pressure on the government's finances.

And recent data has underlined the weakness in the housing sector; mortgage lending fell to its lowest level for more than three and a half years in September, according to the Council of Mortgage Lenders.

The UK and other governments recently took emergency steps to shore up the banking system in a bid to increase liquidity and stabilise the markets.