Public borrowing reaches new record

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The latest surge takes net borrowing to £77.3 billion for the six months of the financial year so far - the highest half-yearly figure since Office for National Statistics (ONS) records began in 1946.

The Treasury expects borrowing to reach a record £175 billion for the year as a whole as the public finances buckle under the impact of recession.

While September's borrowing is slightly lower than the £15.3 billion expected by the City, it is almost double the £8.7 billion seen a year earlier.

The Government also shelled out £5.9 billion in interest payments on its mounting debt pile - 43% above the same month last year and the highest monthly payout on record, according to the ONS. The nation's net debt now stands at £824.8 billion, representing 59% of the UK's entire economic output - another new record.

The figures are likely to intensify the political row over the public finances which saw the main parties clash fiercely during the conference season.

Meanwhile, figures showed strong demand from people buying a new home helped mortgage lending edge up by 2% during September. A total of £12.5 billion was advanced during the month, the second highest figure this year but still 27% lower than in September 2008, according to the Council of Mortgage Lenders.

The group said the improvement during September was driven by a pick-up in people borrowing money to buy a new home.

But it said the rise in house purchase activity was offset by the ongoing decline in the number of people remortgaging, as low interest rates mean many homeowners are better off staying on their lender's standard variable rate when their existing deal comes to an end.

Shadow chief secretary to the Treasury Philip Hammond said: "These record borrowing figures underline the extent of Labour's debt crisis. A responsible Government would act immediately to start reducing public spending and bring Britain's deficit down. Failure to act will risk interest rate rises, causing the recovery to falter and putting jobs at risk."