Borrowing At All Time High Posted on July 18th
8:43am UK, Friday July 18, 2008
Public sector net borrowing for the first quarter of 2008/2009 was £24billion, the biggest quarterly figure since records began in 1946.
Figures released by the Office for National Statistics today also show that public sector debt at the end of June stood at 38.3 percent of GDP, the highest since July 1999.
The figures are likely to raise expectations that the Government could break one of its key fiscal rules - to keep borrowing below 40% of GDP.
Earlier today Gordon Brown was accused of “losing control” of the economy as reports emerge that his fiscal rules are being rewritten to allow more Government borrowing.
Government officials are drafting a looser framework to ensure the Treasury would not break the present borrowing limit, the Financial Times reports.
The fiscal rules were laid down by Mr Brown as Chancellor when Labour came to power in 1997 in an effort to assure the party’s reputation for economic competence.
But with the Government predicted to face a £8bn tax revenue shortfall because of the current economic downturn, it appears they will be breached soon.
Shadow chancellor George Osborne told Sky News: “The collapse of these fiscal rules means the era of Brown economics is over.
“The Government should have put aside money in the years of economic growth, and it didn’t.
“Britain lacks economic leadership at the very moment it needs it the most.”
Sky’s political correspondent Niall Paterson said: “He appears to have two options - raise taxes, unpopular at a time of economic slowdown, or declare that the economic cycle is over and rewrite the fiscal rules.”
Liberal Democrat Treasury spokesman Vince Cable believes policy should be put in the hands of an independent body to stop the Government “fiddling” the figures.
He added: “It’s completely lacking credibility for the Treasury to be marking its own exam papers and setting its own questions.
“What we need is an Ofsted for the economy.”