UK public debt has passed the £1 trillion mark for the first time, as the Government borrowed nearly £14bn last month despite its continued austerity drive. (The Telegraph)Public sector net debt excluding financial interventions, such as bank bail-outs, rose to £1.004 trillion in December, the highest since records began in 1993.
The Office for National Statistics (ONS) said it expected the figure to ease back in January due to tax inflows, but to rise again in February.
However, borrowing in December came in lower than expected, putting Chancellor George Osborne further ahead of a target set by the Office for Budget Responsibility (OBR) to bring borrowing down by £10bn to £127bn this financial year.
The ONS said that public sector net borrowing, excluding financial interventions fell to £13.7bn in December, down from £15.9bn in the same period in 2010.
Sterling slipped slightly against the euro following the news, after falling close to a four-week low on the back of better-than-expected eurozone PMI surveys. The pound also fell a quarter of a cent against the dollar, to $1.5534.
Vicky Redwood, senior economist at Capital Economics, said that the £1 trillion figure was "a reminder of the enormity of the challenge that still lies ahead to get the public finances back on a sustainable footing."
She added: "We expect weaker growth than the OBR is forecasting to make its future borrowing forecasts much harder to meet. Indeed, so far, it has been weaker spending growth helping borrowing to fall, whereas tax receipts are falling short of the fiscal forecasts."
Stalling growth saw the Chancellor revise UK borrowing forecasts in last year's Autumn Statement. Borrowing is now expected to be £5bn more this financial year than originally forecast, £19bn higher next year and £30bn higher in 2013-14.
The OBR also said in November that downward revisions to its growth forecasts meant that the deficit would also shrink less quickly over the next five years.
Most economists expect official GDP figures released on Wednesday to show the UK economy contracted during the final quarter of 2011.
Growth is expected to have fallen 0.1pc in the three months to December according to a Bloomberg poll, compared with a 0.6pc rise during the third quarter.
The International Labour Organisation (ILO) warned on Monday that Britain risks falling back into recession because of an "unabated" weakening of the jobs market, while the Ernst & Young ITEM Club and the Centre for Economics and Business Research believe that the UK is already in recession.
