Morning:
13°c
The City was reeling today when the Government revealed it was forced to borrow a record £19.9 billion last month.
That raises the likelihood that crippling tax rises will be imposed as the Treasury attempts to correct its finances.
The May figure was even worse than analysts feared. The first tax rises could come as soon as January when the reduced rate of VAT could be raised above its former rate of 17.5%.
Nick Bubb at Pali International said: "The Government needs to raise money and it may feel it is better to do that by increasing VAT than closing hospitals or sacking teachers. It could be a least worst option." The borrowing binge, which compares with £12.2 billion last May and the previous record of just under £19 billion in March, takes total public debt to £774.8 billion.
The surge in public borrowing was caused by a £3.9 billion slump in tax receipts combined with a £3.4 billion rise in public spending.
Meanwhile, the Bank of England admitted lending to businesses remains very weak. The data from the Bank indicate that businesses are not seeing green shoots of recovery and that the Bank's quantitative easing programme is not yet working.
The Bank's monthly Trends in Lending survey reports bank lending to businesses fell to £7.9 billion in May against £9 billion in April and £12.6 billion in March.
Reader views (13)
All they have done is fudged the markets - for now. When the money runs out next time, there won't be any left to play with. Wait and see!.
- Mark Burton, St Ives. Cambs
Crash Gordon the Failure. Why is he still un-elected PM?
- Jacqueline, Hampstead, London
Thank you Gordon Brown, for your leadership, creating the conditions, and allowing this to happen.
Your place in history is assured.
- Dave Davies, Basingstoke, Hants
You want your houses to stay overvalued? This is the consequence
Oh by the way life's better in other countries
- Philip Wildsmith, Moscow RF
Now the government have interfered in the financial affairs of this country way beyond there mental abilities, Brown the Clown is turning out to be a disastrous juggler, the electorate deserves what it gets, the vote in Salford proves that.
With such clowns around how an intelligent man like Mervin King keeps his sanity is beyond me.
- Royston Amphlett, Bournemouth England
It's barmy. How can this country survive. It's going to mean massive tax increases to pay of all this money. A financial expert I spoke to said the averaqe Paye tax ould be somewher in the region of 58% of an individuals salary. Dont these idiots running the country realise we won't be able to afford to work.
- Themanoftruth, United Kingdom
Get all the MPs to pay back wot they robbed us of, and bingo, less debt. Fire half of the PR jerks in the government and bingo, less debt. Better yet, fire all MPs and bingo, £850,000 each (cost of parliament on top of pay, expenses and allowances, security, fish and chips, whiskey and who knows wot else) saved. Fire the Lords and bingo, well, OK, it's not that much - only £190,000 each, but even so, less debt. With 646 MPs and 750 Lords that's a load of dosh gushing away every day. Send 'em to Tehran. Appoint the Citizens' Advice Bureau to run the country! They'd do a damn sightbetter job. Ask anybody.
- John Problem, Hackney UK
Who ever signed the paperwork should pay for it. Wonder if there's a legal loophole whereby the tax payer can object to what 'others' do?????
Anyone ready to launch a test case?
- Tony Islander, Herts
If the Government needs to raise money; why don't they raise it from the Banks?
- Mickyinlondon, london
proof, if needed, that Gordon brown has done what he promised and rescued the UK and indeed the world, hey keith ??
- Joanna, london
Brown and his Darling the Grey man can stick their tax rises where the sun don't shine!
- George, Hempstead - Kent
Please, why are the figures for the last ten years and projected, on all welfare spend, continually buried? Figures on all othr aspects of gov spend are released. Reason? They dont want us to know.
- Mark Armstrong, london. uk
It's all the fault of the blasted green shoots. Need billions and billions in water and fertilizer costs to keep them shooting,
- Albert Hall, hove england
