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Public sector borrowing hits record high in November

The UK’s public sector net borrowing reached £20.3bn in November which is the highest monthly figure since these figures were first started in 1993. This figure compares with the £15.5bn which was recorded in November 2008. This is according to figures published by the ONS this morning.


According to the Pre Budget Report the chancellor is expecting total public sector net borrowing to reach £178bn during 2009/10.


Public sector net debt when expressed as a percentage of gross domestic product was 60.2% at the end of November 2009 compared with 49.6% at the end of the same month last year. Net debt reached £844.5bn last month compared with £706.2bn a year earlier.


A large chunk of debt arose from the bank bailouts and when these interventions are excluded, public sector net debt at the end of September 2009 stood at £686.3bn which is equivalent to 49.3% of GDP. However, this figure stood at 39.4% a year earlier.


The good news was that November’s borrowing figure was lower than most analysts expected, which is good news on top of the promising unemployment figures which came out earlier in the week. Stabilising or falling unemployment will take some of the pressure off welfare benefits and more people in work will contribute towards the overall tax take. On top of this, the VAT rate will return to 17.5% in January, which will again help the flow into the government coffers.

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Posted in government borrowing, government spending, taxation

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