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UK debt hits record of £799bn UK debt hits record of £799bn
(20 minutes later)
Total outstanding government debt in the UK has risen to a record £799bn, or 56.6% of UK GDP - the highest since records began in 1974.Total outstanding government debt in the UK has risen to a record £799bn, or 56.6% of UK GDP - the highest since records began in 1974.
Figures showed the government borrowed £13bn in June, almost twice as much as a year ago, after the downturn shrank tax receipts. New borrowing in June was £13bn, almost twice as much as a year ago, the Office for National Statistics said, after the downturn shrank tax receipts.
Separately, the government's tax take fell by £32bn in the past year - the biggest fall since the 1920s. The figures also reflect the cost of bank bail-outs and higher spending on social security benefits.
The chancellor has said new borrowing will reach £175bn this financial year. One economist described the state of the public finances as "dire".
Analysts had forecast borrowing of £15.5bn in June.
"The figures are modestly better than expected. It doesn't take away from the fact that the state of public finances is dire and that a considerable degree of fiscal tightening will be required," said Philip Shaw, chief economist at Investec."The figures are modestly better than expected. It doesn't take away from the fact that the state of public finances is dire and that a considerable degree of fiscal tightening will be required," said Philip Shaw, chief economist at Investec.
"The figures are volatile on a month-on-month basis. The size of the shortfall and volatility mean there is little to celebrate.""The figures are volatile on a month-on-month basis. The size of the shortfall and volatility mean there is little to celebrate."
Analysts had forecast borrowing of £15.5bn in June.
The UK is on track to meet Chancellor Alistair Darling's forecast of £175bn of borrowing this financial year.
'Robust plan required''Robust plan required'
Public borrowing for May was revised down to £18.6bn from an initial estimate of £19.9bn.Public borrowing for May was revised down to £18.6bn from an initial estimate of £19.9bn.
Business groups warned that, although it appears that public borrowing is in line with the chancellor's forecast, the government must not sit back.Business groups warned that, although it appears that public borrowing is in line with the chancellor's forecast, the government must not sit back.
"It would be wrong to tighten policy while the recession continues, but maintaining Britain's international credibility requires a robust plan for restoring our public finances over the medium-term," said David Kern, chief economist at the British Chambers of Commerce."It would be wrong to tighten policy while the recession continues, but maintaining Britain's international credibility requires a robust plan for restoring our public finances over the medium-term," said David Kern, chief economist at the British Chambers of Commerce.
"This must focus on curtailing public spending across the board, while avoiding damaging measures that would harm wealth-creating businesses.""This must focus on curtailing public spending across the board, while avoiding damaging measures that would harm wealth-creating businesses."
Meanwhile, a National Audit Office (NAO) report said that tax receipts fell by 10% in the past year - the biggest fall since 1923.Meanwhile, a National Audit Office (NAO) report said that tax receipts fell by 10% in the past year - the biggest fall since 1923.