Britain slips even deeper into the red

GEorGE osborne’s masterplan to tackle Britain’s bloated deficit suffered another setback yesterday as the country plunged deeper into the red.

official figures showed borrowing in June, at £14.4bn, was £500m higher than the same month last year – despite talk of austerity.

It means the Government has borrowed £42.9bn in the first three months of the fiscal year.

That is £4.5bn more than in the same period last year and threatens to leave the Chancellor’s plans to trim the annual deficit in tatters.

Borrowing has fallen from a record £158bn under Labour to £126bn last year, but analysts warned that efforts to cut the deficit to £120bn this year are now in jeopardy.

The national debt now stands at £1.04trillion – or £41,500 per household. That is up from £945bn a year ago, £779bn when the Coalition came to power, and £500bn when Gordon Brown became prime minister in 2007.

The bleak figures came less than 24 hours after the International monetary Fund warned that the Treasury’s strategy to restore the economy to health could be just months away from failure.

It said the Chancellor should water down the austerity package if the economy fails to bounce back by early next year.

The return to recession has pushed up spending on benefits such as unemployment, and hit tax receipts.

This was reflected in June’s public finance figures, which showed a 0.1pc drop in income tax to £10.8bn and a 3.2pc rise in welfare payments, including unemployment claims, to £15.4bn.

Government spending so far this year is up 2.1pc while tax receipts have risen by 2.5pc.