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Public sector borrowing hits record high

_46577249_007040257-1The UK's public sector net borrowing hit a record high of £20.3bn in November, official figures have shown.

The figure was the highest for any month since records began in 1993, but was less than economists had expected.

The Office for National Statistics also said the public sector net debt was £844.5bn, or 60.2% of overall UK economic output.

Government debt as a percentage of GDP has risen considerably since the start of the financial crisis.

In November 2008, public borrowing was £15.5bn, while net debt stood at £706.2bn, or 49.6% of GDP.

'Constrained growth'

"The UK's public finances have deteriorated further in November, but not as badly as the market had feared," said James Knightley at ING.

"Certainly the better labour market data is helping government finances and a return to growth will further help moderate the rate of deterioration."

Data released earlier this week showed the increase in the UK unemployment rate continuing to slow between August and October.

But Mr Knightley said the size of the deficit would force the government to cut back on spending, which would "constrain the UK's growth prospects".

Securing growth is seen as key to paying down some of the burgeoning government debt. The UK is still mired in recession at a time when every other major global economy is growing again.

Government spending

Analysts said the overall level of public borrowing for this financial year was on track to hit the £178bn forecast by the government.

They also said that the deficit could improve slightly when VAT returns to 17.5% in January, boosting government tax revenues that have slumped during the recession.

Not only has the government received less money, it has also spent a lot more, largely on bailing out the banks and trying to stimulate the economy.

But despite the sharp increase in public borrowing, overall debt levels as a percentage of GDP are similar to those of other major, developed economies.

Source: BBC News

 

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