Government borrowing increased to £8.2 billion in October, official figures showed, in what will be a blow to Chancellor George Osborne as he prepares to deliver his Autumn Statement next week.
Latest figures from the Office for National Statistics (ONS) show public sector net borrowing excluding banks was £1.1 billion higher than in October last year, and represented the worst deficit for any October since 2009.
Looking at the current financial year, public borrowing between April and October stood at £54.3 billion, which is £6.6 billion lower when compared with the same period last year.
However, PwC chief economist John Hawksworth claimed the Government was set to overshoot the Office for Budget Responsibility (OBR) spending forecasts for the financial year by up to £5 billion despite this fall.
“Today’s public finance data were a little disappointing for the Chancellor,” he said.
“Monthly data can be volatile, but the cumulative public borrowing total for the first seven months of the financial year was also only £6.6 billion lower than a year earlier, as compared to an OBR forecast in July that borrowing for 2015/16 as a whole will be around £20 billion lower than in 2014/15.
“Our estimates based on simple extrapolation from these data suggest that public borrowing could overshoot the OBR target by around £5 billion this year.”
Mr Hawksworth said the Government could yet make up this gap if self-assessment income tax receipts come in strongly in January and the Treasury keeps departmental spending under tighter control for the rest of the year.
“But it will be an uphill struggle,” he warned.
IHS chief economist Howard Archer said the latest borrowing figures would be difficult news for the Chancellor to digest ahead of Wednesday’s combined Autumn Statement and Spending Review.
“Not only did public finances deteriorate year-on-year in October but it now looks hugely difficult for the Chancellor to meet his fiscal targets contained in July’s budget.
“This is even allowing for the fact that the public finances can be volatile from month to month and can be revised significantly. In fact, it was the worst October for the public finances since 2009.”