Record levels of public borrowing set to rise further, economists warn

Public borrowing is at its highest since records began but economists are warning that "dreadful" levels of government borrowing are set to escalate further as the economy lurches towards recession.

The Office for National Statistics said that public sector net borrowing came in higher than expected at £8.1bn, a record for a September and far above the £4.8bn shortfall seen in September last year. The total amount borrowed for the first half of the 2008/09 fiscal year came in at £37.6bn versus £21.5bn in the same period a year ago. It is the largest six monthly total since records began in 1946.

"The September public finances were dreadful, deteriorating even more than expected," said Howard Archer, economist at consultancy Global Insight. "This highlights the extremely poor state of the public finances as they are hit by past largesse, the marked economic slowdown, markedly weak housing market activity and prices, rising unemployment and government policy concessions since the March budget."