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June public sector borrowing higher-than-expected

Figures from the government showed that there was a £14.5 billion shortfall in the public sector budget during June and total public sector net debt has now topped £900 billion. When you consider that this is 63% of GDP for June, and the highest on record, this perfectly illustrates the very difficult situation materialising in the UK. So is the worst over?

Despite the fact that George Osborne has already announced significant public sector budget cuts, these are just the tip of the iceberg. Net debt in the UK is set to rise above £1 trillion in the short term and some believe it could actually top £1.5 trillion before it starts to recede. Against this background there is no doubt that further public sector budget cuts are inevitable and, where possible, tax rises will be introduced by the authorities.

Even though there is no doubt that much of the damage to the UK economy was done by the credit crunch and the resulting recession, there is also no doubt that Gordon Brown had not saved funds in the good years and was therefore left short in the bad years. So while the Labour MPs are waving their hands in the air during Prime Minister's Question Time there is certainly blame on both sides of the house with regards to the current economic outlook in the UK.

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