The latest figures from the Office for National Statistics have revealed that public sector net borrowing stood at £6.7bn last month, £2.3bn worse than in October last year.
Although some tax revenues, such as VAT and NI contributions showed strong growth, the fact that corporation tax revenues are down 9 percent in the financial year to date undermined the overall figures, which will add to calls from the public and many politicians for multinationals to pay more.
Borrowing, excluding financial interventions such as bank bailouts, came in at £8.6bn, higher than the £6bn that was widely expected, which means that for the tax year-to-date, the total stands at £73.3bn, five billion pounds higher than the year before.
Chancellor George Osborne wants borrowing for the full year 2012/2013 of £120bn and these latest figures, which are the last before his Autumn Statement to the Commons on 5 December, leave him facing tough choices.
As he remains under pressure to loosen the austerity drive that his critics argue is damaging economic growth, Mr Osborne is equally squeezed on the option of imposing more spending cuts to cover weaker than expected income, which could mean that one of his golden rules, ensuring that the UK’s debt-to-GDP ratio starts falling to 2015, may be abandoned.
In response to the figures, a Treasury spokesperson said that while the economy is healing, it still faces many challenges and insisted that the Government’s plans to bring spending under control are on track.
Rob Chedzoy specialises within providing tax planning advice, support and guidance to owner-managed businesses.