The UK's public sector borrowed £7.5bn more than it raised in income in October, the Office for National Statistics has reported. The deficit in the month was bigger than expected, against a market consensus of £5.3bn.
Excluding public sector banks, the borrowing increased by 15.5% to £8.2bn, against an expectation of £6bn. The government's income fell by £1bn, a bitter pill to swallow for chancellor George Osborne, less than a week ahead of his autumn budget statement on 25 November.
Other than taking away space for any further government spending, the bad numbers mean that Osborne is unlikely to reach his fiscal targets set out in the emergency summer budget in July. The numbers painted a dark scenario, especially compared to expectations from the Office for Budget Responsibility.
"Borrowing is still set to come in below last year's level, totaling £54.3bn in the fiscal year so far, compared to £60.9bn at the same stage last year. But, the OBR expected a faster decline than this," Ruth Miller, UK economist at Capital economics said.
"So the Chancellor faces the uncomfortable situation of having to find some money to soften the tax credit cuts at the same time as the borrowing forecasts are pushed up a bit," she added. "Therefore, any money the Chancellor gives back to those losing tax credits is just likely to be offset by further cuts to other parts of the welfare budget, tax rises and/or deeper departmental spending cuts."
A total borrowing bill of £54.3bn has been counted in the year so far, almost 11% less than the first ten months of 2014. However, the promises of cuts in department spending made by the Conservative government, have not come through entirely.