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Public borrowing hits record high.

Summary: Public borrowing has hit a record high and bank bail-outs could add Au1.5 trillion to the national debt.

Public borrowing has hit a record high and bank bail-outs could add Au1.5 trillion to the national debt.

Government borrowing between April and January soared to Au67.2 billion, the Office for National Statistics (ONS) said - prompting forecasts it could hit Au100 billion this year.

The figures put Chancellor Alistair Darling's Pre-Budget forecasts of Au78 billion in borrowing for the year to April - already revised upwards once - under threat.

Public sector net borrowing is now almost three times higher than at the same stage last year.

The ONS added that Royal Bank of Scotland and Lloyds Banking Group - rescued with Au37 billion in taxpayer cash - were being classed as public corporations.

Adding their liabilities onto the public books would add between Au1 trillion and Au1.5 trillion to net debt - equivalent to between 70 and 100 per cent of the UK's entire output.

The public finances have come under increasing strain as tax revenues fall and benefit payouts rise. Plans to kick-start the economy and bank rescues have added to the pressure.

Philip Hammond, the Shadow Chief Secretary to the Treasury, said: "Our true national debt is now significantly larger than our national income, adding to the risks facing the economy and the burden on future generations."

Liberal Democrat Treasury spokesman Vince Cable added: "Ministers must now accept the reality that they effectively own two large banks and use them to ensure the flow of much needed credit into the economy."

Angela Eagle, Exchequer Secretary to the Treasury: "We are unashamedly sustaining public expenditure at a time when there is a global economic downturn to support the economy."

The taxpayer now owns 68 per cent of RBS and 43 per cent of Lloyds following the crisis last year. RBS is expected to post losses of up to Au28 billion for 2008, while Lloyds last week warned of Au10 billion in losses at merger partner HBOS.

Independent Television News Limited 2009. All rights reserved.

Independent Television News Limited 2009. All rights reserved.

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Publication:Independent Television News Limited (ITN)
Date:Feb 23, 2009
Words:360
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