Public borrowing breaks records

The fragile state of Britain’s finances was highlighted yesterday by figures showing public borrowing in August broke records for the month. Experts warned the Government would miss targets for tackling the deficit. The figures followed a gloomy assessment by the International Monetary Fund which this week cut its 2011 UK growth forecast from 1.5 to 1.1 per cent. Some ministers are said to be pressing for up to £5billion extra capital spending to kickstart the teetering economy. One leading businessman yesterday called for more private finance to go into public projects, for example by encouraging firms to build a new network of tollroads. Any such move would raise fears of a repeat of Labour’s Private Finance Initiative deals which critics say have cost taxpayers more in the long term than if the state had paid. Excluding financial interventions like the bank bail-outs, public sector borrowing hit £15.9billion in August, said the Office for National Statistics.That was £1.9billion more than in the same month last year and sharply higher than the £13billion economists expected and the highest for August since records began. Analysts said hopes of cutting borrowing from £142.7billion in 2010-11 to £122billion this year would be dashed if trends continued. But a Treasury spokesman said: “These are challenging times but despite economic growth being lower than the forecast earlier this year tax receipts have continued to grow.”