The higher borrowing reflects the fact that the economy will grow by less than the Office for Budget Responsibility (OBR) expected in March. The OBR now thinks real GDP in 2016 will be 4.8 per cent lower than it expected in March. Thanks to this, tax revenues are expected to be £21bn lower in 2015-16 than expected in the Budget just nine months ago.
However, George Osborne decided to respond to this not by tightening policy further, but by abandoning his debt reduction target - which most economists thought unjustifiable anyway. "We should let the automatic stabilisers work," he said.