Borrowing soars to £241bn so far this year as Government strains to prop up Britain’s Covid-hit economy
The brutal cost of the coronavirus crisis has pushed Government borrowing to almost £241billion so far this year.
With vast sums being spent to prop up Britain’s pandemic-struck economy, it borrowed £31.6billion last month, the Office for National Statistics said.
It brought public sector borrowing since April up to £240.9billion. That is £188.6billion more than a year ago and the largest amount since comparable records began in 1993.
Latest figures released by the Office for National Statistics underline the challenge faced by Chancellor Rishi Sunak (pictured) as he seeks to foster an economic recovery
At the same time, public sector debt is almost £2.1trillion or 99.5 per cent of the UK economy, the worst level since 1962.
The figures underline the challenge faced by Chancellor Rishi Sunak as he seeks to foster an economic recovery.
It came as economists warned new lockdowns to control coronavirus would trigger a double-dip recession after output rose by a record 16 per cent in the third quarter.
It is now feared the economy will contract again in the current fourth quarter of 2020 and again in the first three months of 2021.
Last month, the Office for Budget Responsibility (OBR) forecast that borrowing could reach £393.5billion by the end of March.
It also warned that ministers face having to plug a black hole of between £21billion and £46billion in the public finances by 2025, raising the prospect that Sunak will be forced to levy significant tax rises or slash spending.
However, experts suggested that the situation could be even worse than the OBR’s predictions.
Howard Archer, chief economic adviser of the EY Item Club, said the Treasury would have to borrow further billions as tax revenues are being squeezed.
Yesterday, the Chancellor stood by the high levels of pandemic spending, saying it was ‘the right thing to do’.
He added: ‘When our economy recovers, it’s right that we take the necessary steps to put the public finances on a more sustainable footing so we are able to respond to future crises in the way we have done.’
The ONS said the UK’s national debt has ballooned to just shy of £2.1trillion this year. Economists predict Government borrowing for the full year to March 2021 could hit £400billion, more than double the peak following the global financial crisis in 2009-10.
It means Sunak faces a tricky balancing act between supporting the economy and getting a grip on the public purse.