UK public sector borrowing rose to a record high in the first eight months of the financial year as the pandemic continued to weaken public finances with falling revenues and soaring spending.
The government needed to borrow £284.7bn to cover the gap between its spending and revenues from April to November, according to the Office for National Statistics.
This is the highest figure since comparable records began in 1984 and around three times the highest cash requirement in any other April to November period since records began.
Public finances are expected to remain under pressure as the economy struggles with the new restrictions put in place to limit the spread of a new variant of coronavirus that resulted in a surge in infections in the south-east of England.
Commenting on the figures, the chancellor, Rishi Sunak, pointed to the government’s investment of £280bn to protect jobs and businesses during the pandemic which he said was “the right thing to do”. But 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.”
In his last spending review on November 20, Mr Sunak said that the coronavirus pandemic would raise government borrowing this year to a peacetime record of £394bn. He also announced cuts to overseas aid spending and a freeze in public sector pay increases as the first steps to reduce debt accumulation.
Tuesday’s public sector borrowing figure was swelled by a £23.9bn government net cash requirement in November, when activity was squeezed by a month-long lockdown in England.
As a result, public sector net debt at the end of November reached £2,099.8bn, similar to the size of the economy and the highest level since 1962.
A 42.2 per cent fall in value added tax receipts and a 29.8 fall in receipts from corporation tax in the financial year to November compared with the same period last year contributed to the widening hole in the public finances. Over the same period, total cash outlays increased by 38.5 per cent.
The figures were released as the Office for National Statistics revised gross domestic output growth in the third quarter marginally higher to 16 per cent compared with the previous quarter, from earlier estimates of 15.5 per cent. Despite that, the economy remained 8.6 per cent smaller than in the same quarter last year.
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2020-12-22 07:39:54Z
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