Borrowing bill remains too high as Britain again fails to hit debt reduction target

Chancellor George Osborne’s efforts to cut the national debt have been dealt another blow after missing his borrowing target for the second month in a row.

Figures released by the Office for National Statistics showed that public sector net borrowing was £9.7 billion in May, or the equivalent of £3,621 a second.

This was higher than forecasts but £0.4 billion lower than the deficit in May 2015.

It was previously reported that for the financial year 2015/16 net borrowing was £76 billion – missing the ONS target by £2.7 billion.

This was despite the Treasury’s coffers being boosted by a rise in stamp duty for second homes, income tax, national insurance contributions, corporation tax and VAT receipts.

The chancellor had taken “his eye off the economic ball”, according to Ross Campbell, public sector director at accountancy industry body ICAEW

He added: “It was imperative that the chancellor put public sector finances at the top of his priority list. [But these figures] illustrate that he has done quite the opposite and has taken his eye off the economic ball.

“It is vital that government devises a comprehensive and rigorous strategy to kick-start a faltering economic recovery.”

The British Chambers of Commerce chief economist, David Kern, agreed that things didn’t look good. He said: “Although borrowing fell marginally in May, the first two months of the current financial year point to disappointing progress in reducing the deficit, and our assessment remains that reaching a budget surplus by the end of the decade will be difficult to achieve.”

Scott Bowman, an economist at Capital Economics, put the figures down to “the effect of the recent slowdown in the economy.”

Alan Clarke, an economist at Scotiabank, said the Government faced a tough challenge to cut borrowing this year.

He said: “Two months into the financial year and we are seeing borrowing up cumulatively by £150m compared with the same two months a year earlier – higher borrowing not lower.

“So now the run rate needed to hit the full year target is a £2 billion reduction per month. It’s still early days, but the main message is slippage.”