Deficit grows as government spending is up 10%. Is the economic plan still working?

The Tories have defined themselves as the party dedicated to cutting the deficit, and the words “the long-term economic plan is working” have practically become a mantra for David Cameron and George Osborne.

But the chancellor looks increasingly likely to miss his targets to reduce Britain’s borrowing, after a jump in spending was over £1bn more than economists had expected.

Borrowing for September was £11.8bn - £1.6bn more than the chancellor had forecast, official statistics show.

Over the first half of the tax year, from April until September, borrowing hit £58bn – a rise of £5.4bn since the same period last year.

Meanwhile, lower tax receipts have also compounded the financial headaches for the government. This has been due, in part, to minimal movement in wage rises, a quieter than expected property market, as well as an increase in the personal tax-free allowance to £10,000.

According to the Guardian, a spokesman for the Treasury said the “government’s long-term economic plan is working”, adding that the UK economy is growing faster than any of its G7 peers.

He said: “We have seen stronger growth in receipts this month, but as today’s figures show, the impact of the great recession is still being felt in our economy and the public finances. At the same time, we have to recognise that the UK is not immune to the problems being experienced in Europe and other parts of the world economy.”

The Office for Budget Responsibility warned that taxes were unlikely to fill the hole left by government spending. It said: “Factors such as weaker-than-expected wage growth, lower-than-expected residential property transactions and lower oil and gas revenues mean it is looking less likely that the full year receipts growth forecast will be met.”

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