As the Government struggles to bring down its borrowing, the latest ONS figures reveal that the public sector has borrowed even more money than before.
Between April and September 2014, £58bn was borrowed compared to £53.6bn in during the same period last year although that figure does not include public sector bank figures.
The amount borrowed by the country’s public sector banks also went up, climbing by £1.6bn in September 2014 compared to the same month last year.
This means it is unlikely that the Government will reach its debt reduction targets. David Kern, the Chief Economist at the British Chamber of Commerce said: “The UK’s public sector finances have worsened in September and in the first six months of this financial year, compared to the same period last year. Any prospects of the government reaching its debt reduction target outlined in the last budget appear to have vanished.
“Despite strong economic growth, the government’s ability to generate tax revenue has deteriorated due to weak earnings growth, the decline in oil and gas outputs, and the challenges facing the financial sector. We must adjust to this new reality, while persevering with a long term plan to reduce current public sector spending. It is important for all political parties to resist the temptation to make pre-election promises that might have harmful long-term effects on the economy.”
As it stands, public sector debt is nearly equal to 80% of the country’s GDP. This will cause problems for the Chancellor as he attempts to bring borrowing under control. According to Capital Economics, public sector borrowing will need to drop by 37% during the remainder of the financial year for the Government to hit their targets.
Image by the Conservatives.