Borrowing down to £6.5bn – but Osborne may still miss deficit target

BORROWING fell by more than expected in October, dropping to £6.5 billion, it emerged yesterday.

Public sector borrowing, excluding financial interventions such as bank bail-outs, is now £1.2bn lower than the previous year, and below the City’s expectations of £6.8bn. Borrowing between April and September was also revised down by £1.7bn.

The figures come a week before Chancellor George Osborne’s autumn statement, when he is expected to announce a package of measures to help boost the UK’s ailing economy amid criticism that his austerity measures have choked off the recovery.

On the same day, the Office for Budget Responsibility will update its forecasts for government borrowing, with many economists expecting it to admit that Mr Osborne will fail to eradicate the structural deficit by 2014-15 as was previously planned. Yesterday’s figures mean government borrowing in the year since April stands at £68.3bn, which is still in sight of its target of £122bn in the financial year.

But there are increasing fears that the worsening state of the economy will scupper the deficit reduction plans by increasing the government’s benefits bill and lowering its tax income. Prime Minister David Cameron has admitted that controlling Britain’s debt was “proving harder than anyone envisaged”.

After briefing ministers, Mr Osborne declined to predict whether he will meet his target of eliminating the deficit by 2014-15.