UK public borrowing hits record high in May

Britain's public sector net borrowing (PSNB) hit a record high in May as government expenditure surged.

Britain's public sector net borrowing (PSNB) hit a record high in May as government expenditure surged.

The Office for National Statistics (ONS) said that the PSNB stood at £8.735 billion last month.

That was the highest monthly total since comparable records began in April 1993 and compared with analysts' forecasts of £7.0 billion.

The ONS said the deficit was driven by central government outlays rising by 7.5 per cent on the year while receipts were up only 4.2 per cent.

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It said that a change in the timing of educational grants may have driven up spending but this should have netted out as the awards are given to local authorities.

The PSNB in the financial year so far (April and May) stood at £10,248 billion, up only £464 million on the same time last year.

Spending in the first two financial months of the year was up 4.9 per cent on a year earlier, compared with a budget forecast of 5.9 per cent.

Analysts described the figures as disappointing and said Chancellor of the Exchequer Gordon Brown could end up overshooting his PSNB forecast for the full financial year of £31.9 billion.

But the Treasury was unperturbed. "We continue to meet our fiscal rules," a spokesman said. The public sector net cash requirement stood at £5.189 billion in May.

This was also higher than expected and compared with £3.229 billion a year earlier. Within that VAT receipts were actually 1.8 per cent down than a year earlier, in perhaps another sign of waning demand on the high street.