Public sector borrowing increases

Financial experts have warned that the latest increase in public sector borrowing will make achieving a budget surplus even harder.

The Office for National Statistics (ONS) has revealed its latest figures, highlighting that public sector net borrowing in September 2016 was £10.6 billion, compared to £9.3 billion in September 2015.

Public sector net debt for September was £1,627.2 billion, an increase of £39.5 billion compared with September 2015.

Additionally, local government net borrowing for the financial year-to-date was estimated to be zero, a decline from the £2.3 billion net surplus at the same point last year, most likely the result of the grants from central government to local government having reduced.

Manj Kalar, head of public sector at the Association of Chartered Certified Accountants, warned that public borrowing targets will be exceeded and by quite some margin in the run up to Phillip Hammond’s Autumn Statement.

She commented: “After a slew of figures all pointing to a worsening economic outlook such as weaker growth, rising inflation and a falling pound today’s public borrowing figures were higher than expected at £10.6 billion. To put this into context current public borrowing has already reached £45.5 billion of the total forecast for the year of £55.5 billion by the OBR back in the Spring.

“Corporation Tax and property tax receipts are both down compared to similar period over the last few years and VAT receipts are lower too. This has resulted in higher borrowing to maintain funding of public services.”