Government borrowing rises by 20% over last six months
According to the Office for National Statistics, government borrowing has risen by 20 per cent during the first half of the financial year.
Borrowing, measured from the six months leading up to September, has now reached £40.3 billion, an increase of £7.4 billion compared to the same time period one year ago.
Borrowing also increased on a monthly basis, with borrowing in September reaching £9.4 billion, £0.6 billion more than September 2018’s figures.
This rise in the month of September is the first time this has occurred for five years.
According to the ONS, borrowing increased because of seasonal winter fuel payments, which cost £2 billion, and student loan write-offs, which accounted for £2.7 billion.
Both of these figures are recorded in September.
Currently, government rules dictate that borrowing cannot exceed 2 per cent of the national income, something which casts doubt over Chancellor Sajid Javid’s upcoming spending plans.
Javid has announced his first budget, due to take place in November, and pledged that he would be “turning the page on austerity” with a number of spending rises.
Responding to these figures, and Javid’s pledge to increase spending, John Hawksworth, chief economist at PwC, said: “Today’s data showed the UK public finances heading further into the red, with the deficit more than £7 billion higher in the first half of this financial year than the same period last year.
“This borrowing overshoot will not make the chancellor’s choices any easier as he heads towards his first Budget on 6 November.”
In order to circumvent these issues, Javid is expected to relax rules concerning government borrowing and their relation to national income.
Thomas Pugh, UK economist at Capital Economics, said: “We already know that the chancellor wants to review the fiscal rules in the Budget on 6 November, as there is very little chance of hitting the current ones.
“We don’t know what the new fiscal rules will be, but they are likely to allow for a substantial loosening of fiscal policy at the Budget, which would support economic growth.”