Borrowing gives Setback to George Osborne’s Plan as National Debt Surges

George-OsbornGeorge Osborne's plan to plug Britain's budget black hole suffered a shock on Wednesday. Despite economic recovery, the country remained in the red. According to figures of The Office for National Statistics, the Government borrowed £488million in July.

July is usually a month when it banks a surplus because of influx of corporation and income tax payments. The figure showed that tax receipts were 3.4% higher than a year ago.

However, there was a 3.7% rise in government's spending because of ministers failings in pushing through cuts to curb Britain's bloated public sector.

As a result, the first deficit was witnessed in July for three years. There was an £823m surplus last year. It meant that £36.8billion was borrowed by the bank in the first four months of the 213/14 fiscal year, whereas £35.2billion was borrowed at this stage in 2012/13.

The national debt has hit 74.5% of national income. The national debt was below £350bn a decade ago.

Rob Wood, UK economist at Berenberg Bank, said, "The UK's fiscal position remains poor after the spending splurge before the financial crisis and the effects of the recession. The deficit is high and will take many years of sustained growth and austerity to correct".