Spending review: UK public sector borrowing soars to record levels
by Peter Wozniak
Britain’s public sector borrowing has broken records, rising to £15.9 billion for August.
The increase, larger than that expected by the government, was the result of a spike in inflation leading to higher interest payments on government bonds linked to the retail price index (RPI).
The RPI is calculated based on a one-off measure of inflation taken in September.
The borrowing figure from the Office of National Statistics (ONS) does not however take into account higher tax receipts and capital recovered from partly taxpayer-owned banks.
The UK’s borrowing as a whole was stable and slightly decreasing, but the figure of £149 billion remains high.
The government will emphasise that the figures released today are a vindication of the coalition’s economic strategy of drastic deficit reduction as unavoidable given the unsustainable scale of borrowing and debt.
Trade unions have argued for an alternative economic strategy, whilst the Labour party insists that the speed and scale of the cuts risks putting the economic recovery in jeopardy.
The coalition meanwhile is bracing itself for a backlash of public opinion as the programme of cuts shifts from the background into political reality.
The spending review, outlining the precise scope and scale of cuts, will be revealed on October 20th, amid public anxiety over their potential impact.
