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Concerns have been raised after the Government announced it had reached its annual borrowing limit, just seven months into the financial year. Figures released last week by the Treasury showed that public borrowing was now at its highest level for 13 years. Public sector net borrowing currently stands at £24.2bn, the highest for the first seven months of the year since 1994-5, and £6.7bn worse than last year. ‘The implications for local government are that everybody feels the pinch whenever the public finances are stretched,' said David Kern, economic adviser at the British Chambers of Commerce. He added: ‘It just shows the budgetary position is very stretched. ‘If these events continue unabated, the Government will have to put up taxes again.' The Government now needs the public finances to perform as strongly in the rest of the financial year as they did last year, if it is to hit Treasury targets. In his pre-Budget report, chancellor Alistair Darling predicted the deficit would rise from £7.3bn in 2006-7 to £11.5bn in 2007-8. Ian Carruthers, director of policy and technical at the Chartered Institute of Public Finance and Accountancy (CIPFA), said: ‘This ups the pressure on whether or not expectations of the critical January tax receipts from self-assessed and higher-rate taxpayers are realised.' And Doug Godden, head of economic and fiscal policy at the CBI, said: ‘We are concerned that the Government will look to business to pay more in tax.' Government books were in the black in October, with public sector net borrowing showing a £1bn surplus. But the net amount was down from a £3.5bn surplus this time last year because corporate tax revenues were disappointing.

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FINANCE

Pressure is on as Government reaches borrowing limit early

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