Phew!

Now we know why Mervyn King rebuked Darling in the former's speech at the Mansion House.

Yesterday the ONS released government borrowing figures for May. During that month the government had a deficit on its account of £19.9 billion. This was the highest monthly figure since publication began in 1993! (last year in May its was £12.2 billion.) When Prudence was ditched and government deficits began to rise, even a few years ago a figure of £19.9 billion would have been high, even for an annual deficit, but to have a monthly deficit of this size is astonishing.

We note that recently the government has been trying to persuade the banks to take onmore of government debt, perhaps fearful that there was not enough appetite among international lenders, and that our AAA rating could be damaged.

Borrowing was expected to rise, as companies folded and jobs disappeared, and it may be that there were special reasons why revenue was low in May.

Several economists are already predicting that Darling's forecast of total borrowing to cover the deficit will be £175 billion in 2009/10 and could be as much as £200 billion. In the first two months the deficit has already been more than £30 billion. With unemployment expected to rise significantly for several months to come, it is not difficult to see why forecasts of a £200 billion deficit are being made.

It all makes G.Brown's posturing on cuts and spending even more ludicrous.