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From: maceng2	11/20/2009 4:08:35 PM
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Britain Hits Record Public Sector Borrowing ananova.com UK borrowing ballooned by a higher than expected £11.4bn in October, official figures show. The record rise for the month takes public sector net borrowing for the financial year so far to £86.9bn, the Office for National Statistics said. The gloomy figures come a day after the Government unveiled a Fiscal Responsibility Bill - putting plans to halve the UK's deficit within four years on a statutory footing. A Downing Street spokesman said the borrowing figures were "broadly in line with what we expected". But think tank the Organisation for Economic Co-operation and Development has warned that while Britain is starting to pull out of recession unemployment could hit 9.5% in 2011. October is usually a strong month for Britain's public finances due to corporation tax revenues, but the depth of the recession has hammered the Treasury's tax take. The figures showed a record 13th successive month of declining current receipts - down 9% to £41bn- but spending on factors such as unemployment benefits has risen. This has pushed up the Government's total current expenditure to £48.6bn, while net debt has reached £829.7bn - £134.6bn higher than a year ago and equivalent to more than 59% of GDP. Public borrowing is already forecast by the Treasury to reach £175bn this year but the figures could have to be revised higher by Chancellor Alistair Darling in December's pre-budget. This comes after the shock initial estimate of a 0.4% decline in output between July and September when the economy was finally expected to pull out of recession. The OECD has warned Britain needs to come up with a concrete plan to cut the ballooning budget deficit. It said the UK's jobless rate could soar to 9.5% in two years' time and further "substantive" measures may be needed to prevent lingering damage to the labour market by the rise in youth and long-term unemployment. Joblessness has increased faster than in most other European economies because of a deeper recession and more flexible labour rules,it added. The OECD said the world economy was moving out of recession, with Asia leading the way, but warned it would be marred by high unemployment and huge government debt across the industrialised countries. Global growth for next year was forecast at 3.4% from the 2.3% it was predicting as recently as June, after an estimated contraction of 1.7% in 2009. Chief economist Jorgen Elmeskov said: "We are looking at a scenario where disaster has been avoided but we're still looking at a scenario which involves slow growth and high unemployment." The news comes as President Barack Obama warned on the dangers of public debt to the US economic recovery. "It is important to recognise if we keep on adding to the debt, even in the midst of this recovery, that at some point people could lose confidence in the US economy in a double-dip recession," he told Fox News. Commentators have interpreted the President's remarks as trying to prepare the US public for a tough budget in February.

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