Business

UK borrowing at £16.2bn in September

HM Treasury building
Image caption The gap between government income and spending is now higher than the same time last year

The government borrowed a record £16.2bn to plug the gap in the public finances in September, figures from the Office for National Statistics show.

It is the highest borrowing figure for September on record, and is unexpectedly up from the £14.8bn borrowed in September last year.

The UK's total net debt is also the highest to date, at 57.2% of GDP.

The figures come as the government prepares drastic cuts to spending in order to reduce borrowing.

So far this financial year, the government has borrowed a total of £73.5bn - lower than the £77.4bn that had been borrowed by this time last year, when annual borrowing eventually hit a record £154.6bn.

In its last report, the Office for Budget Responsibility said it expected borrowing to total £149bn this financial year.

'Savage cuts' needed

The borrowing figures exclude the impact of the government's interventions in the financial sector as a result of the banking crisis.

If they are included, total government debt is even higher at 64.6% of GDP - or £952bn, while net borrowing for September totalled £15.6bn.

The rise in borrowing for September came as a surprise to many economists, many of whom had predicted a fall.

"Another month, another record," remarked Hetal Mehta, UK economist at Daiwa Capital Markets Europe.

"The fact the government borrowing was higher in September this year than a year ago - and indeed higher than in any September - is concerning given the higher VAT receipts and stronger pace of economic growth earlier in the year."

She added that the figures emphasised the scale of the challenge that lay ahead for the government.

She said "savage cuts" would be needed if George Osborne was to meet his goal of cutting the structural budget deficit to zero by 2015-16.

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