British public borrowing spiked to its highest since records began more than 60 years ago in 2008/2009 setting a grim backdrop to today’s budget.
Official data showed public sector net borrowing for the tax year just ended totalled almost £90 billion, more than £10 billion pounds above finance minister Alistair Darling's November forecast and the highest reading for any year since records began in 1946/47.
"This suggests that the Chancellor will be unveiling some truly terrible estimates for borrowing this year and next, which will keep bond markets very nervous," said James Knightley, economist at ING Economics.
Investors, already spooked by the prospect of hefty upwards revisions to the government's borrowing forecasts, pushed gilt futures lower and the pound fell against the dollar.
Mr Darling is expected to announce a £2 billion package aimed at preventing school and university leavers from joining the dole queue and boosting services for the unemployed.
Britain's housing market, pivotal to the economy, also shows little sign of recovering.
British gross mortgage lending fell 52 per cent year on year to an estimated £11.5 billion in March, the Council of Mortgage Lenders said today.
The government's ability to kick-start Britain's recession-hit economy with further large-scale fiscal stimulus is limited by the sharp deterioration in the public finances.
Public sector net borrowing was more than £19 billion in March alone, the highest for any month on record and well above the £16.15 billion forecast by analysts.
The cash-based measure of borrowing was almost double forecasts at more than £28 billion in March - also a record.
Reuters