Borrowing £3bn higher than City forecasts, but Treasury says it is making good progress

BRITAIN’S reliance on borrowing to pay for public services was revealed again yesterday in public spending figures for April.

They revealed that, excluding a one-off boost from the transfer of Royal Mail Pensions into the UK government’s coffers, borrowing was £3 billion higher than City forecasts for the month.

The £28bn from the Royal Mail ensured a surplus of £16.5bn. Taking it away, it meant that borrowing hit £11.5bn for the month, up from £9.1bn in April last year.

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Total borrowing for 2011-12 is expected to hit £124.4bn.

With that figure down £12bn over the year, the Treasury yesterday said it was making “good progress in dealing with the deficit”. However, the figures mean the UK’s total debt mountain has risen to more than £1 trillion – or more than 65 per cent of total GDP.

Ministers will have to carry on borrowing over the lifetime of this parliament, but to ensure it is falling as a percentage of GDP by 2015-16.

The Royal Mail Pension funds will be used to pay down debt rather than fund, extra spending, a Treasury spokesman confirmed.

Labour Treasury spokeswoman Rachel Reeves said: “These are extremely disappointing figures on the public finances. Stripping out the one-off effect of the Royal Mail pension funds coming on to the government’s books – which will be a net burden on the taxpayer in the coming years – the government borrowed more last month than it did a year ago.”

“At £11.5bn, this is a record figure for government borrowing in the month of April. As we have always warned, cutting spending and raising taxes too far and too fast would choke off the recovery, push up unemployment and make it harder to get the deficit down.”