Government borrowing reaches record monthly high

Wednesday, 22 December 2010 12:00

The Office for National Statistics has published figures for November that show government borrowing has hit a record high. The figures are unexpected and represent the largest amount ever borrowed by a government in a single month.

Net borrowing was up by a massive 33 per cent from this time last year, reaching £23.3 billion, up from £17.4 billion in November 2009.

The figures represent something of an embarrassment for the government, who have stressed that they are going to reduce the deficit.

The figures will also be another influence in the rising rate of inflation and so may impact on interest rates in the medium term. Further concerns could be raised over the UK's ability to lower the deficit and that the countries AAA credit rating could be jeopardized.

Government borrowing in November was higher than expected partly due to increased spending on defence, health and the bail-out of Ireland

Public sector net borrowing now stands at 58 per cent of UK GDP. The figure has reached £104.4 billion which is within the target after eight months of the year. The yearly target is £148.5 billion and it is expected that the UK should be within that.

The figures seem to confirm that economic growth in the UK will be lower than expected as predicted by the CBI yesterday, who said that the effects of the VAT increase and higher utility bills will lower economic growth in 2011.

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