UK government borrowing jumps in October ahead of post-election splurge
The UK government borrowed much more than expected last month, official figures have shown, with October borrowing hitting its highest in five years.
The increase in borrowing comes even before one of the two main parties has had a chance to carry out large spending increases following the General Election on 12 October.
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Government borrowing last month was £11.2bn, £2.3bn more than in October 2018 and well above economists’ predictions.
Over the financial year so far, borrowing was £46.3bn, 10.3 per cent higher than during the same period last year, the Office for National Statistics (ONS) said.
The figures come as the General Election campaign heats up, with both main parties promising to turn on the spending taps should they be elected.
“The worst October for the public finances for five years won’t prevent whoever wins the election embarking on a fiscal splurge,” said Andrew Wishart, UK economist at consultancy Capital Economics.
Labour would unleash the biggest torrent of cash. For example, it would spend £400bn over 10 years on upgrading schools, hospitals and tackling climate change, among other things.
The Tories have promised both spending rises and tax cuts. Boris Johnson yesterday promised to raise the national insurance threshold to £12,500 over his time in office, which the Institute for Fiscal Studies (IFS) think tank said would cost £11bn.
The parties’ policies mean public borrowing is almost certainly set to rise significantly over the coming years. Both parties have abandoned their old spending commitments, including the government’s rule to not have public spending exceed two per cent of GDP each year, which the UK was on track to miss.
Read more: General Election 2019: Boris Johnson hints at plans to hike national insurance
Wishart pointed out that the deficit – the difference between the amount raised and the amount spent – was set “on track to rise for the first time in a decade this year”.
Public sector net debt – the total amount the UK owes – reached 80.4 per cent of GDP in October, well above the 40 per cent ratio before the 2008 financial crisis.