Brown defends soaring borrowing

Updated 22.30 Mon Oct 20 2008
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Borrowing soared to a record high in September as the nation's finances came under more pressure.

The Office for National Statistics said net borrowing rocketed by £8.1 billion, a record for the month.

The figures come a day after Chancellor Alistair Darling said he is ready to spend his way out of a looming UK recession

Conservative leader David Cameron challenged Prime Minister Gordon Brown on the issue in the Commons and said: "Can you confirm that Britain having the largest household debt of any major economy has ever seen."

He warned of a record budget deficit put by some as high as £64 billion.

"Isn't the £64 billion question this - why when business and families need more help, have you left the cupboard so bare?," he demanded, as Mr Brown reported to the Commons on the outcome of the EU summit.

Mr Brown said debt is "considerably lower" than a decade ago and added: "The reason we can borrow at this time - which is the right policy... is that our levels of national debt are low."

Talking of the banking crisis and the Government's use of taxpayers' money to bail-out some institutions he said: "You cannot solve this problem unless you get to the root cause of this problem."

But Mr Brown was interrupted by cries of "it's you" from the Tory benches.

The Prime Minister continued: "The root cause of the problem, which did start in the United States of America, despite your wish to avoid that question, is irresponsible and undisclosed lending that took place in the private sector.

Borrowing between April and September was a mammoth £37.6 billion - outstripping the whole of last year and the highest for more than 60 years.

In March's Budget, Mr Darling said public sector net borrowing would reach £43 billion in the current financial year, before falling to £38 billion next year.

But the economic slowdown means that sluggish growth in tax receipts has been outpaced by Government spending. Current receipts grew by £1 billion to £39.2 billion but expenditure jumped by almost £2 billion to £43.6 billion.

Capital Economics' Paul Dales said: "At this rate borrowing is on track to hit at least £60 billion in the full financial year. But much worse is to come - borrowing is set to rise above £100 billion in future years."

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