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| Public borrowing hits new record | Public borrowing hits new record |
| (10 minutes later) | |
| New government borrowing rose sharply in April, the Office for National Statistics (ONS) said. | New government borrowing rose sharply in April, the Office for National Statistics (ONS) said. |
| Public sector net borrowing rose to £8.46bn this April compared to £1.84bn in the same month last year. | Public sector net borrowing rose to £8.46bn this April compared to £1.84bn in the same month last year. |
| It was a new record for the public deficit in April, a month when government coffers are usually boosted by tax receipts. | It was a new record for the public deficit in April, a month when government coffers are usually boosted by tax receipts. |
| Significantly, ratings agency Standard & Poor's revised its outlook for the UK to negative due to borrowing worries. | Significantly, ratings agency Standard & Poor's revised its outlook for the UK to negative due to borrowing worries. |
| Blow to UK | Blow to UK |
| The ratings agency said that Britain's triple-A rating for its government bonds was at risk in the future if the next government did not produce a credible plan to put its debts on a "secure downward trajectory". | The ratings agency said that Britain's triple-A rating for its government bonds was at risk in the future if the next government did not produce a credible plan to put its debts on a "secure downward trajectory". |
| It reaffirmed the UK's actual credit rating, but said the outlook had deteriorated because of massive borrowing to deal with the recession and the banking crisis. | It reaffirmed the UK's actual credit rating, but said the outlook had deteriorated because of massive borrowing to deal with the recession and the banking crisis. |
| S&P said that government debt could reach 100% of GDP by 2013. Currently, it is 53%, according to the latest ONS figures. | S&P said that government debt could reach 100% of GDP by 2013. Currently, it is 53%, according to the latest ONS figures. |
| It is the first potential downgrade of UK public debt since the agency began rating government debt in 1978, and could lead to higher borrowing costs if it makes international investors less likely to buy Treasury bonds. | It is the first potential downgrade of UK public debt since the agency began rating government debt in 1978, and could lead to higher borrowing costs if it makes international investors less likely to buy Treasury bonds. |
| In a statement, the Treasury said that "the Budget set out a clear plan to halve the deficit within five years. That judgement was based on a deliberately cautious view of the public finances." | In a statement, the Treasury said that "the Budget set out a clear plan to halve the deficit within five years. That judgement was based on a deliberately cautious view of the public finances." |
| And it pointed out that Standard & Poor's said it could revise its outlook to stable "if fiscal outturns are more benign than [they] currently anticipate". | |
| The pound fell 3 cents against the dollar after the revised outlook was published. | |
| Forecast at risk | Forecast at risk |
| Rising unemployment is increasing government expenditure while hitting tax receipts | |
| The new figures suggest that the government may miss its forecast of public borrowing of £175bn for the financial year 2009-10 - itself a massive increase on this year's public borrowing of £90bn. | The new figures suggest that the government may miss its forecast of public borrowing of £175bn for the financial year 2009-10 - itself a massive increase on this year's public borrowing of £90bn. |
| "It is obviously very early days, but the dreadful April public finance data and ongoing sharply deteriorating trend suggest that the Chancellor is straight away on the backfoot in his expectations [for public borrowing]," said Howard Archer of IHT Global Insight. | "It is obviously very early days, but the dreadful April public finance data and ongoing sharply deteriorating trend suggest that the Chancellor is straight away on the backfoot in his expectations [for public borrowing]," said Howard Archer of IHT Global Insight. |
| The narrow measure of public sector borrowing, the current budget deficit, also increased sharply in April, rising to £7.0bn compared to just £728m in the same month one year earlier. | The narrow measure of public sector borrowing, the current budget deficit, also increased sharply in April, rising to £7.0bn compared to just £728m in the same month one year earlier. |
| The recession has sharply reduced government tax receipts, especially from the corporate sector and bonus payments in the financial sector. | The recession has sharply reduced government tax receipts, especially from the corporate sector and bonus payments in the financial sector. |
| Meanwhile, the government is having to pay out more in benefits as unemployment continues to rise. | Meanwhile, the government is having to pay out more in benefits as unemployment continues to rise. |