Newspaper article The Evening Standard (London, England)

Surprise Jump in Britain's Borrowing Disappoints City

Newspaper article The Evening Standard (London, England)

Surprise Jump in Britain's Borrowing Disappoints City

Article excerpt

Byline: Hugo Duncan

CHANCELLOR George Osborne today pledged to press ahead with painful spending cuts after a shock rise in borrowing.

Official figures showed the Government borrowed [pounds sterling]15.2 billion last month -- up from [pounds sterling]14.9 billion in June last year and [pounds sterling]7.3 billion in June 2008 shortly after the recession started.

It pushed the deficit for the first quarter of the current fiscal year up to [pounds sterling]42.4 billion -- [pounds sterling]1 billion more than the shortfall of [pounds sterling]41.4 billion in April, May and June last year.

The rise in borrowing disappointed the City and Westminster and was a stark reminder of how hard it will be to slash the deficit in the coming months and years. It was hoped that borrowing would fall while tax receipts rise and spending falls as the economy recovers from the worst slump since the Second World War.

Tax receipts rose to [pounds sterling]37 billion last month from [pounds sterling]35.6 billion in June last year. But spending also rose, from [pounds sterling]47.1 billion to [pounds sterling]49.3 billion.

Jonathan Loynes, chief European economist at Capital Economics, said: "June's public finances figures put something of a dent in recent hopes that the fiscal position is now on a clearly improving path.

"It does perhaps damp hopes that the public finances might improve more quickly than the Office for Budget Responsibility has predicted ... And with the Budget forecasts still relying on a solid recovery over the next year or two, worries about the UK's fiscal outlook have certainly not evaporated."

The Government borrowed a record [pounds sterling]155 billion last year -- a whopping 11% of gross domestic product. Osborne plans to borrow [pounds sterling]149 billion this year, or 10. …

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