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| UK finances deteriorate further | UK finances deteriorate further |
| (40 minutes later) | |
| The state of the UK's public finances deteriorated further in January, according to official figures. | The state of the UK's public finances deteriorated further in January, according to official figures. |
| The Office for National Statistics said the government had borrowed a further £4.3bn last month. | The Office for National Statistics said the government had borrowed a further £4.3bn last month. |
| It is first time the government has borrowed money in January since records began in 1993. | It is first time the government has borrowed money in January since records began in 1993. |
| January typically brings the government a large income from tax receipts, giving it a budget surplus and allowing it to repay some of its debts. | January typically brings the government a large income from tax receipts, giving it a budget surplus and allowing it to repay some of its debts. |
| But this year tax receipts were significantly lower than expected, the ONS said, with both income tax and capital gains tax income falling sharply. | But this year tax receipts were significantly lower than expected, the ONS said, with both income tax and capital gains tax income falling sharply. |
| Tax receipts dropped 11.8% compared with January last year, when the government was able to repay £5.3bn. | Tax receipts dropped 11.8% compared with January last year, when the government was able to repay £5.3bn. |
| Analysts had expected a budget surplus would allow the government to repay about £2.8bn of its debts. | Analysts had expected a budget surplus would allow the government to repay about £2.8bn of its debts. |
| Major challenge | Major challenge |
| "These are pretty ghastly figures and come as somewhat of a surprise," said Andrew Goodwin, senior economic adviser to the Ernst & Young Item Club. | "These are pretty ghastly figures and come as somewhat of a surprise," said Andrew Goodwin, senior economic adviser to the Ernst & Young Item Club. |
| "January usually yields a healthy surplus due to receipts from corporation tax and, even in the current climate, it is surprising to see the government rack up a deficit." | "January usually yields a healthy surplus due to receipts from corporation tax and, even in the current climate, it is surprising to see the government rack up a deficit." |
| ANALYSIS Hugh Pym, BBC chief economics correspondent The sorry story of the public finances has reached another depressing chapter. Self-assessment tax payments usually surge into government coffers in January so it should be a month when receipts exceed spending. But not this time, even with a rise in VAT. | |
| The recession has wreaked havoc with government finances in all the leading industrialised nations - but even so the UK's annual deficit is one of the highest. Total borrowing for the financial year to date is now running at more than £122bn. | |
| The chancellor's forecast for the full year, on a comparable basis, is £170bn. A Treasury source argued that they were on track to meet that forecast. The hope is that factors like lower-than-expected unemployment will offset the predicted fall in tax revenues. Even so fingers will be crossed in the Treasury right up till Budget Day. | |
| He added that the deterioration emphasised the scale of the fiscal challenge still facing the government, with Chancellor Alistair Darling facing growing calls to act more quickly to tackle the deficit. | He added that the deterioration emphasised the scale of the fiscal challenge still facing the government, with Chancellor Alistair Darling facing growing calls to act more quickly to tackle the deficit. |
| With two months of the financial year remaining, borrowing has already reached £122.4bn. | |
| The government expects public sector borrowing to peak at £178bn this year - equivalent to 12.6% of GDP. | The government expects public sector borrowing to peak at £178bn this year - equivalent to 12.6% of GDP. |
| Mr Darling has pledged to halve the deficit in percentage terms over the next four years, but earlier this week a group of 20 economists said action needed to be taken sooner. | Mr Darling has pledged to halve the deficit in percentage terms over the next four years, but earlier this week a group of 20 economists said action needed to be taken sooner. |
| The BBC's chief economics correspondent, Hugh Pym, said that whoever formed the next government would face the challenge of tackling the deficit while ensuring that the recovery in the UK economy continued. | The BBC's chief economics correspondent, Hugh Pym, said that whoever formed the next government would face the challenge of tackling the deficit while ensuring that the recovery in the UK economy continued. |
| Business groups renewed their calls for "a credible plan" from the government for curbing the deficit. | Business groups renewed their calls for "a credible plan" from the government for curbing the deficit. |
| The British Chambers of Commerce said a failure to act more quickly was putting the UK's credit rating at risk. | The British Chambers of Commerce said a failure to act more quickly was putting the UK's credit rating at risk. |
| "As well as explicitly spelling out its medium-term spending plans, it is now necessary for the government to announce a freeze in the public sector wage bill, and an immediate review into the cost of public sector pensions," said David Kern, the BCC's chief economist. | "As well as explicitly spelling out its medium-term spending plans, it is now necessary for the government to announce a freeze in the public sector wage bill, and an immediate review into the cost of public sector pensions," said David Kern, the BCC's chief economist. |
| The government has defended its approach, arguing that cutting public spending too quickly risks harming the UK's economic recovery. | The government has defended its approach, arguing that cutting public spending too quickly risks harming the UK's economic recovery. |