Further into the red!

The balance on the Government's account between Income and expenditure has worsened again. The deficit in September was th highest ever recorded for that month. This year at £6.9bn, compared with the expectations of analysts of £6.3bn, was 21% higher than the figure of £5.7bn last year.

The August deficit was also a record sum for that month.

In September Government receipts (- taxation of various sorts, etc.,) were up 4.8% as compared with September 2006, but current spending rose by 6.2%. Long ago Mr. Micawber realised what happens if this sort of gap continues.

The new Chancellor has already revised upwards the borrowing need for the financial year from the £34bn, made in the March Budget, to £38bn. He had hopes that a strong growth in Government receipts during the autumn would hold further expansion in debt under some sort of control, but September must be worrying for him, and us.

It again brings into sharp relief the preposterous claim that the statement by George Osborne could imply a failure to fund by a few million a highly popular tax cut. If their forecasts are so wildly optimistic on their own budget deficit, it ill becomes them to protest.

The growing accumulated deficit, and the consequent cuts in public services in all directions, is of concern for a number of reasons. High deficits means upward pressure on interest rates, which are already sensitive. They also mean that if the economy slows markedly then Government will be in a greater fix, as incomes and tax takes begin to fall.