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Budget deficit is worst ever for June

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Date: Friday 18 Jul 2008

LONDON (ShareCast) - Public sector borrowing surged to a new record last month, indicating how hard the government is finding it to balance the books as the economy slows.

Figures from the Office for National Statistics revealed public borrowing leapt to £24.4bn in the first three months of the year, up £9.6bn on a year ago and the highest since records began in 1946.

The number for June was £2.9bn higher than the same time last year at £9.2bn, with the current budget deficit at £7.6bn, some £2.3bn more than 2007, taking the first quarter total to £20.4bn.

Today’s report also showed a £5.4bn hike in the net cash requirement to £15.5bn, the most since the series began in 1984.

Meanwhile, public sector debt rose to its highest since 1999, hitting 38.3% of gross domestic product (GDP).

The news comes as experts accuse Gordon Brown and Alistair Darling of attempting to borrow their way out of the country’s economic woes by revising its fiscal rules.

The Chancellor is expected to makes changes this autumn to allow borrowing to rise above the maximum 40% of gross domestic product allowed at the moment.

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