Blow for Javid as borrowing surges

SURGING spending and weak revenues are pushing up the budget deficit, leaving the Treasury on track for a surge in borrowing of £26bn this year, economists warned, potentially taking the deficit to nearly £50bn even before any extra “nodeal” Brexit spending.

In the first four months of this financial year, the Exchequer borrowed £16bn, £6bn more than the same period last year, the Office for National Statistics said.

And it is likely that higher spending combined with a weaker economy will push up the deficit. The national debt amounts to just over £1.8 trillion, the equivalent of 83.4pc of GDP. July is usually a good month for the public finances, running a surplus as corporate tax payments are due, as are some self-assessment income tax payments. This year’s surplus disappointed, falling to £1.3bn (£3.6bn last year).

Smaller revenues from the Bank of England’s stock of bonds bought under quantitative easing hit the public finances, while income tax revenue rose less than 2pc.

Overall revenues in July slid 0.5pc on the year even as current spending rose 4.2pc, with higher social benefit payments and a rising public sector wage bill.