Public borrowing is likely to miss target again

By DAN ATKINSON
Updated: 07:02 EST, 19 June 2011

Public borrowing figures for May will be scrutinised on Tuesday for warning signs that George Osborne's deficit-cutting strategy is heading off track.

April's figures were surprisingly bad, showing net borrowing of £10 billion, excluding State intervention in the banking system.

Given that this was worse than the £7.3 billion seen in April 2010 - before the coalition Government took power - alarm bells rang in some quarters.

Worse: Net borrowing was £10bn, compared to £7.3bn in April

Now, with growth forecasts being steeply downgraded, there are doubts that the economy will deliver the expansion needed to meet the Chancellor's targets.

This year, independent watchdog, the Office for Budget Responsibility reduced its 2011 growth forecast from 2.3 per cent to 1.7 per cent. 

George Buckley, economist at Deutsche Bank, says the final figure could be lower still, adding: 'It would be quite an achievement to get just 1.5 per cent for the year.

'Then, if we fail to hit the 2.5 per cent forecast for 2012, that will make it harder to meet the growth forecasts in 2013 and 2014. There is no doubt that getting the deficit down requires faster growth.'

Osborne is committed to wiping out the 'structural deficit' - the part that is unaffected by the ups and downs in the economy - by 2014-2015.