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Public sector borrowing soaring Public sector borrowing soaring
(10 minutes later)
The's UK public sector net borrowing totalled £8bn last month, the first July deficit for 13 years, official figures have shown.The's UK public sector net borrowing totalled £8bn last month, the first July deficit for 13 years, official figures have shown.
The figure was much worse than the £500m deficit expected by analysts, and comes as the recession continues to reduce the government's tax returns.The figure was much worse than the £500m deficit expected by analysts, and comes as the recession continues to reduce the government's tax returns.
July is typically a month of surplus, due to corporate tax payments.July is typically a month of surplus, due to corporate tax payments.
The government's overall debt now stands at £801bn, or 56.8% of GDP, its highest level since at least 1974.The government's overall debt now stands at £801bn, or 56.8% of GDP, its highest level since at least 1974.
'Caused by recession''Caused by recession'
The Treasury said in a statement that the large deficit in July was expected, and caused by the recession.The Treasury said in a statement that the large deficit in July was expected, and caused by the recession.
"In the first half of the year the whole world was in a steep recession and that affected the public finances here in the UK," said a Treasury spokesman."In the first half of the year the whole world was in a steep recession and that affected the public finances here in the UK," said a Treasury spokesman.
In July of last year, the public sector finances posted a surplus of £5.2bn.In July of last year, the public sector finances posted a surplus of £5.2bn.
Last month's deficit was the first in July since 1996, and the largest for that month since at least 1993.Last month's deficit was the first in July since 1996, and the largest for that month since at least 1993.
July is traditionally a strong month for public finances, as it includes a quarterly corporation tax bill.July is traditionally a strong month for public finances, as it includes a quarterly corporation tax bill.
However, tax revenues fell to £6.2bn last month, from £9.9bn a year earlier, when profits at oil giants such as BP and Shell were lifted by record global crude prices.However, tax revenues fell to £6.2bn last month, from £9.9bn a year earlier, when profits at oil giants such as BP and Shell were lifted by record global crude prices.
VAT takings last month were down 15% from a year earlier. Income tax and VAT takings last month were both down 15% from a year earlier.
Meanwhile public sector spending, including unemployment payments, was up 10.4%.Meanwhile public sector spending, including unemployment payments, was up 10.4%.
In April's budget, the Chancellor, Alistair Darling, forecast that borrowing this year would reach £175bn.In April's budget, the Chancellor, Alistair Darling, forecast that borrowing this year would reach £175bn.