Worst October Borrowing Figures Since 2009

But economists pointed out that the dismal figures mean it’s unlikely Osborne will slow the pace of austerity in next week’s Autumn Statement.

Still, the higher than expected borrowing in October increases the chances that the independent Office for Budget Responsibility will bump up its prediction for government borrowing in the 2015/16 financial year.

John Hawksworth, PwC’s chief economist, said the borrowing amounts were “a little unsatisfactory for the Chancellor”. The last time the Government borrowed more in an October was in 2009, when the deficit for the month was £9.6bn and the economy was still mired in recession.

Until late previous year, strong economic growth had failed to translate into much of an increase in tax revenues, but since then, an increase in the number of people in work and a gradual pick-up in wages have boosted revenue.

A Treasury spokesperson argued the figures underlined the need to cut back public spending drastically in next week’s Autumn Statement. This means that it will redouble austerity measures. Samuel Tombs, chief economist at Pantheon Macro, said. “So absolutely delivering the necessary budget savings is critical”.

“Accordingly, the chancellor probably will make only modest alterations to the overall spending plans, with any lessening of the cuts to tax credits likely being financed by deeper cuts to other areas of spending”.

Osborne has promised to use his statement next week to soften the impact. “If he’s got his eye set on moving next door, he should take heed of those voices telling him not to go that strongly on cuts”.

One possibility, according to Investec, is that weaker- than-forecast inflation will lead the OBR to cut its estimate of the cost of paying interest on index-linked gilts.

From April to October central government spending rose by 1.1% to £402.6bn. Excluding this source of income, government revenue rose 1.4 percent. However, to meet his target, Osborne will have to borrow £15.2bn from November through to March. Net debt was 1.53 trillion pounds, or 80.5 percent of GDP.