Why borrowing figures are bad news for teary Osborne

Chancellor denies he's getting 'panicky' about widespread criticism of his handling of the economy

Column LAST UPDATED AT 11:52 ON Tue 23 Apr 2013

CHANCELLOR George Osborne has revealed that the tears he shed at the funeral of Baroness Thatcher were triggered by the combination of the sermon and the hymns which was "very emotional and … at times overwhelming."

The minister joked on the BBC's Today programme that he sometimes sheds more tears when he hears the day's newspaper headlines on radio. If that's true he might have grown damp-eyed this morning when official figures showed annual net borrowing managed only a slight dip to £120.6 billion in the financial year to the end of March.

Public sector net borrowing was £300 million lower than a year earlier, narrowly undershooting official forecasts for £120.9 billion at the time of the Budget last month. But that is still worse than City hopes for a £117 billion deficit in the financial year and it shows that Britain is still borrowing massively.

Borrowing in March fell £1.6 billion to £15.1 billion, but experts say that was only made possible by the Treasury heavily massaging the numbers by delaying or slashing government departmental spending.

The chancellor denied he was getting "panicky" in the face of a spate of terrible headlines. They have included an attack on his strategy by IMF chief economist Olivier Blanchard, who accused Osborne of "playing with fire" with his fiscal policy. The chancellor dismissed that view as belonging to a well-known Keynesian.

Osborne also refused to accept a warning from the Archbishop of Canterbury, Justin Welby - a former oil executive appointed by Osborne to the Parliamentary banking commission - who said Britain was in a "depression" and would need "something very, very major" to recover. Osborne did not use the D-word himself, preferring to call the UK's predicament a "slow recovery".

Trying to look on the bright side, the chancellor said borrowing was down from £159 billion when he took over from Labour. "That is a big reduction. The budget deficit was 11.5 per cent of our national income when this government came into office. It's now forecast to be 8 per cent. That is a reduction of a third.

"As a result, the British economy faces a difficult situation but not nearly as difficult as those countries which have not faced up to their problems."

The latest growth figures are due on Thursday and likely to give the chancellor another reason to weep. Someone at the Treasury should get him a big bucket of sand, and ask him to stick his head in it. ·