UK public finances hit record deficit for Sept

By Sumeet Desai and Matt Falloon

LONDON (Reuters) - Britain's public sector net cash requirement hit a record high for the month of September, official figures showed on Monday, and the government finances look set to deteriorate even further in the months ahead.

The Office for National Statistics said on Monday the public sector posted a net cash requirement of 12.646 billion pounds in September, compared with a deficit of 8.719 billion in the same month last year.

Analysts had expected a reading of 10.1 billion pounds.

The government's preferred accruals-based measure -- public sector net borrowing -- also came in above expectations at 8.092 billion pounds. This too was a record for the month of September, and compared with 4.775 billion in September 2007.

That left the cumulative PSNB for April to September at 37.589 billion pounds versus 21.458 billion in the same period a

year ago -- the highest half year total since records began in 1946.

"It confirms what we pretty much all know now, that borrowing is set to surge and rise dramatically in the current financial year," said Paul Dales, an economist at Capital Economics.

Chancellor Alistair Darling forecast in his budget this year that full-year PSNB would hit 43 billion pounds, but has repeatedly signalled in the last few weeks that borrowing will need to rise as the economy slows.