Government borrowing hits new high

Public sector net borrowing, excluding financial interventions such as bank bail-outs, hit £15.9 billion in August, up £1.9 billion on the same month a year ago, the Office for National Statistics (ONS) said.

This was the highest figure for the month since records began in 1993.

The Government borrowed more after income tax receipts fell for the first time in the month and expenditure rose after an unusually low figure in July.

This leaves current net borrowing since March at £51.5 billion, down £3.9 billion on the same period the previous year.

The figures add to doubts that the Chancellor can meet the Office for Budget Responsibility’s (OBR) target of reducing the deficit to £122 billion this year.

They will also heap more pressure on the Chancellor’s austerity plans amid allegations the spending cuts are choking off the economy.

The OBR’s estimates are based on assumptions that the UK’s economy will grow at 1.7% this year, but even the Chancellor has conceded this is too optimistic as the global economy falters.

There was some comfort for the Government today after its borrowing figure for 2010/11 was revised down by £5.9 billion to £136.7 billion.

Borrowing for the first quarter of 2011 was also revised down by £2.2 billion and July’s figure was reduced by £2.4 billion.

A Treasury spokesman said: “These are challenging times, but despite economic growth being lower than the OBR’s forecast earlier this year, tax receipts have continued to grow and spending so far this year has grown at the rate the OBR forecast in the Budget.

“These figures also include a welcome and substantial downward revision to borrowing so far this year and to overall borrowing last year.”