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Britain borrows record 16b pounds in August

THE recession's toll on British public finances was highlighted today by official figures showing the government borrowed another 16.1 billion pounds (US$26.3 billion) during August - a record for the month.

The rise took net borrowing to 65.3 billion pounds for the first five months of the financial year so far, the Office for National Statistics said - more than double the 26.1 billion seen at the same stage last year.

Though August's borrowing was slightly lower than the 18 billion pounds forecast by most economists, it still represented the highest ever for the month, and the third biggest monthly borrowing total since records began.

Like most countries around the world, Britain's public finances have deteriorated sharply as tax revenues have sunk during the recession and government spending on such things as unemployment benefits have soared.

At the end of August, Britain's net debt stood at 804.8 billion pounds, or about 57.5 percent of the value of the country's total output.

Many economists fear that the country's debt burden may actually exceed gross domestic product in the next couple of years amid mounting debt interest payments and rising unemployment costs.

Treasury chief Alistair Darling said in his April budget that the figure would likely peak just below 80 percent of GDP in 2013-2014, but his forecasts will likely be revised soon, especially as the recession in 2009 has been deeper than he expected.

With a general election having to be held by June next year, the political debate has moved swiftly on how debt will be brought down.

Earlier this week, Prime Minister Gordon Brown admitted for the first time that Labour would make cuts in public spending.

A Treasury spokesman said today that Darling is meeting with fellow ministers in the run-up to the next set of budget predictions, due later in the autumn.

However, he played down reports that a special set of discussions to identify potential targets for cuts had already been started in the wake of Brown's speech earlier this week.


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