The UK government borrowed a record amount in September, in a bid to boost its finances, Office for National Statistics (ONS) figures published yesterday showed.
The public sector had a net cash requirement of £12.65bn last month, compared with a deficit of £8.72bn in the same period a year ago.
This puts the amount borrowed this financial year at £37.6bn so far, more than the total amount borrowed in 2007.
The latest borrowing figure is more than expected; analysts had forecast that public borrowing would reach around £10.1bn in September.
In his last Budget, Chancellor Alistair Darling forecast for 2008/09 a net borrowing of £43.0 billion.
The ONS statement added: ‘Public sector net debt, expressed as a percentage of Gross Domestic Product (GDP), was 43.4% at the end of September 2008, compared with 36.2% at the end of September 2007.
‘Debt peaked at 44.2% of GDP in 1997, its highest since the mid-1980s.
‘The debt ratio then fell steadily as public sector finances improved, reaching a low of 29.1% in February 2002.
‘Since then it has risen. The Budget forecast for the end of March 2009 is 38.5%.
‘Net debt was £645.3 billion at the end of September, compared with £514.5 billion a year earlier.
‘The Budget forecast for net debt at the end of March 2009 is £581 billion.
‘The most recent figures for public sector net debt excluding Northern Rock are for September 2008, when net debt was £563.4 billion (37.9% of GDP).’
Chancellor Darling has said he will spend his way out of the crisis, as advised by classical economist Maynard Keynes.
l Downing Street confirmed yesterday that plans to increase parents’ rights to request flexible working are likely to be dumped.
No 10 said Business Secretary Mandelson was looking at ‘all regulations due to come into force’, given the economic uncertainty.
Mandelson also said he wants Royal Mail to become ‘progressively private’.
The Hooper Review report, due out in a couple of weeks, is due to recommend this course.
The flexible working scheme was due to be extended to 4.5m parents of children up to the age of 16 from next April, from the current limit to parents whose children are under six or disabled.
TUC General Secretary Brendan Barber said: ‘This would be an astonishingly irrelevant response to the severe economic downturn that we face and, in addition, would run the risk of sending a message to working parents that the government is not on their side.’
Meanwhile, the slump in mortgage lending continued in September, according to Council of Mortgage Lenders (CML) figures.
Total lending was £17.7bn in September, down 10% from August and 42% lower than in September last year.
This was the lowest level of lending for any month since January 2005 and the lowest September figure since 2001.
Indicating more homeowners are heading for negative equity, CML director general Michael Coogan warned: ‘House prices will continue to fall in the next few months.’
l Giant Dutch banking and insurance company ING is to receive a 10bn euro ($13.4bn; £7.7bn) government cash injection.
Dutch Finance Minister Wouter Bos said ING needed help because of the credit squeeze, but insisted the bank was not in major trouble.
Thousands of UK savers have deposits in the group’s ING Direct banking service, which has also taken over responsibility for £2.5bn of deposits of 160,000 UK customers with the failed Icelandic bank Kaupthing Edge.
