UK’s public sector borrowing soars to £16 billion in November
19 Dec 2008
As Britain enters recession the country's public sector finances, deteriorated sharply as its borrowing, soared to an all-time high in November to £16 billion, far above analysts expectations of £13.7 billion.
The total borrowing for the first eight months stands at £56.1 billion, compared with £29.2 billion for the same period last year.
Public sector net borrowing was £5.3 billion higher than £10.7 billion for the month of November last year and the Chancellor, Alistair Darling had warned earlier that net borrowing could hit £118 billion next year.
Chancellor, Alistair Darling had announced a £20-billion stimulus package at the pre-budget report last month and this figure is not taken in November calculations as also the estimated Vat cut of £12.4 billion which was introduced in December.
The total government net debt was 44.2 per cent of GDP and stood at £650 billion, compared to £615 billion last year.
The high debt figures was due to the government injecting huge sums of money into the near collapsed banking industry by doling tax payers money for stakes in the Royal Bank of Scotland, Lloyds TSB among others.
The high borrowing was also due to the government wanting to spend billions to fuel the staggering economy even as tax receipts are declining with most of the companies cutting cost, axing jobs and idling manufacturing plants due to fall in demand all round.
With the UK housing market showing practically nil activity, stamp duty income for the government has gone south.
The figure for December is likely to much worse when the Vat cut of £12.4 billion and the government's bail out of RBS is accounted for in next month.
With the number of people claiming jobless benefits rising by 75,000 last month to a high of 1.07 million has added to the strain on public expenditure.
Experts say that with that tax receipts down 5.2 per cent compared to the same month last year and spending up by 6 per cent and the government projecting tax revenues to slide down further, will affect the budget projections and are shocked with the figures as this is just the beginning of the recession.