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Public Sector Borrowing Reaches Record High Of £15.9bn In August, Amid IMF Warning On UK Economy

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GEORGE OSBORNE
PA

Public sector borrowing reached a record £15.9bn in August, according Office for National Statistics figures released on Wednesday morning.

The news comes as the Treasury denied reports of a u-turn on spending following the International Monetary Fund warning that the UK economy has a one in six chance of a double-dip recession.

On Tuesday the IMF downgraded its growth forecasts for the UK and warned the United States and Europe are at risk of plunging into a double-dip recession.

Chief Secretary to the Treasury Danny Alexander said on Wednesday morning ministers were not conflicted about how to re-invigorate the economy, dismissing reports of an internal argument about whether to bring forward £5bn in capital spending.

"We are not changing our spending plans," he told BBC Radio 4's Today Programme.

Despite BBC reports that some cabinet ministers wanted to inject more cash into the economy, a Treasury spokesperson told the press association: "We have our spending plans and we are sticking to them".

And Alexander said the IMF had deemed the UK's stance on deficit reduction "appropriate".

"The message I am taking from what the IMF have said is that we should stick to our plans. Of all the countries that needs to be taking action to get their deficit under control it is the UK.

"What we are seeing around the world are doubts about politicians ability to stick to their plans and take tough action. We have done that and it is a prize we shouldn't sacrifice at all".

However the IMF report said Britain may have to reassess its defect reduction plans in the event of any further downturn.

This morning Ed Balls, the shadow chancellor, repeated his warning that the cuts were going too far and too fast, telling BBC Radio 5 Live: "The message from the IMF is that the pace of cuts is too fast."

And Angela Eagle, Labour’s shadow chief secretary to the Treasury, said cutting spending and raising taxes too far and too fast would lead to a "vicious circle".

"That’s because if you choke off the recovery and put tens of thousands of people on the dole, claiming benefits rather than paying taxes, then it’s harder to get the deficit down," she said.

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