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Public sector borrowing increases again

News that UK Public sector borrowing increased by £14.8 billion last month, which is an all-time high for the month of September, will shock many investors. However, while this was actually slightly lower than economists had forecast it does bring the six-month borrowing figure to a massive £76.2 billion. Overall public sector debt in the UK now stands at £824.8 billion (59% of GDP) with the figure for the 2009/10 tax year set to exceed the government's initial forecast of £175 billion.

As we approach the next general election this is a worst-case scenario for the UK government with a likelihood that the £175 billion forecast for the full year could prove very much on the optimistic side. Even though there have been signs of an improvement in the UK economy over the past few months, it will still take some time for this to flow into the UK government's coffers in the shape of increased income tax receipts.

The UK government recently confirmed that it is looking towards a number of state assets sales over the coming months which could bring in billions of pounds although in the overall picture will have little impact on the ever-growing debt. Many economists believe that the UK debt position will slow down the UK recovery and leave the UK business arena lagging other developed countries.

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