LONDON, Apr 22 – Britain\’s public borrowing will balloon to a record £175 billion in 2009/10, British finance minister Alistair Darling forecast on Wednesday.
Darling, making his annual budget statement before parliament, also predicted the public sector net borrowing requirement (PSNBR) would stand at £173 billion in 2010/11.
The PSNBR, the government\’s preferred measure of public finances, stood at £90 billion in 2008/09 as the government fought recession and bailed out banks.
"Around the world, fiscal deficits and government debt have been rising sharply to levels not seen since the Second World War," Darling said.
"This is a response to an unprecedented financial crisis and a deep and widespread global recession.
"Allowing borrowing to rise – protecting services, helping people and businesses – is the right thing to do."
The British government has pumped billions of pounds into struggling banks since the credit crunch first erupted in late 2007, snapping up major stakes in Lloyds Banking Group and the Royal Bank of Scotland.
"Many countries have also intervened to strengthen their banking systems," Darling added.
"My public finances forecasts today include a provisional estimate for the potential cost of this -totalling 3.5 percent of GDP."
Britain\’s public debt, including the cost of bailing out the country\’s banking sector, was meanwhile forecast by Darling to surge to 59 percent of national income in the current financial year.
Darling also forecast debt would rocket to 68 percent in 2010/11 as a proportion of gross domestic product (GDP), before striking 78 and 79 percent in 2011/12 and 2012/13 respectively.
"Since the autumn, we have put the banks on a stronger footing, cleaning up their balance sheets, and helping boost bank lending," Darling added.
"As a result, banks will be able to lend billions of pounds more this year and next, to homebuyers and businesses.
"Getting credit flowing again is the essential precondition to economic recovery."