Borrowing surge hits tax cut hopes

AN unexpected surge in borrowing has given Philip Hammond a budget headache ahead of next month’s crucial Autumn Statement.

The Government borrowed £10. billion last month – £1.3 billion more than in September 2015 – according to the Office for National Statistics. The rise means there is little or no room for giveaways next month.

The deficit in the first six months of the tax year reached £45.5 billion – just £2.3 billion less than in the same period of last year.

Former chancellor George Osborne had hoped to cut borrowing from £7 billion last year to £55.5 billion this year – but Mr Ham- mond has already abandoned this plan. He promised to ‘reset’ budget policy following the vote to leave the European Union but he now has little room for maneuver.

The national debt is a record £1. 3 trillion – 83.3 per cent of national income and the equivalent to £ 5,000 per household.

The Chancellor said: ‘Our debt and deficit remain too high. We remain committed to fiscal discipline and will return the budget to balance over a sensible period of time’.

Samuel Tombs, UK economist at Pantheon Macroeconomics, said: ‘Progress in reducing the budget deficit has virtually halted.’