• Public sector net borrowing in September 2012 was £12.8bn, £0.7bn lower than September 2011
Commenting on the public sector finance figures published today by the Office for National Statistics, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
"Borrowing in September was lower than many expected. Taking the entire period from April to September 2012, and removing the effect of special factors, total borrowing so far this financial year was almost £5bn higher than in April-September 2011. If recent trends continue we expect borrowing for the entire financial year to exceed the OBR’s forecast at the time of the Budget by £12bn. The OBR expected a decline this year, but the overshoot now appears to be smaller than appeared likely a few months ago.
"To maintain credibility the government must persevere with a realistic plan to reduce the deficit over the medium term. However, there is also a risk that if weak growth continues, borrowing could overshoot, and this could threaten the UK's credit rating. Given these difficult circumstances, it is important to continue with public spending cuts in areas such as welfare, pensions and the size of the civil service, which would ensure that the structural deficit is gradually reduced.
However urgent measures are now needed in the short term to boost growth and to improve the productive capacity of the economy. That means significant measures should be introduced in the Autumn Statement to help businesses grow. The Bank of England could also use existing QE more effectively by buying private sector debt, particularly securitised SME loans. It could also consider the idea suggested by Adair Turner, chairman of the FSA, around central bank funding of government spending.”