UK government borrowing ballooned in February on emergency support measures to cushion the economic impact of the coronavirus pandemic, official data showed on Friday.
Borrowing last month hit £19.1 billion (€22.3 billion), a record for February, the Office for National Statistics (ONS) said in a statement. That contrasted with just £1.6 billion for the same month one year ago, just before the pandemic took hold.
“The coronavirus pandemic has had a substantial impact on the economy and subsequently on public sector borrowing and debt,” the ONS said.
The government has relied heavily on borrowing as tax receipts have tanked during COVID lockdowns.
Prime Minister Boris Johnson’s Conservative government has spent £352 billion in emergency measures, particularly for its furlough scheme of paying the lion’s share of private sector wages for millions of Britons.
Total state debt currently stands at £2.13 trillion, the equivalent of 97.5 per cent of Britain’s total gross domestic product, according to the ONS. Such a level has not been seen since the early 1960s, it noted.
Total state debt currently stands at £2.13 trillion, the equivalent of 97.5% of Britain’s total GDP. Such a level has not been seen since the early 1960s- UK Office of National Statistics
“Coronavirus has caused one of the largest economic shocks this country has ever faced, which is why we responded with our £352 billion package of support to protect lives and livelihoods,” finance minister Rishi Sunak said in response to Friday’s grim data.
“This was the fiscally responsible thing to do and the best way to support the public finances in the medium term. But I have always said that we should look to return the public finances to a more sustainable path once the economy has recovered, and at the budget, I set out how we will begin to do just that, providing families and businesses with certainty.”
Sunak signalled that tax rises are likely in the coming years to pay for emergency support. He announced plans in his annual budget earlier this month to ramp up tax on company profits to 25 per cent by 2023, from the current 19 per cent.
In a separate development on Friday, the government announced that it will sell some of its stake in state-rescued lender NatWest, formerly known as the Royal Bank of Scotland. NatWest will pay £1.1 billion to buy back 591 million shares, in a move which trims the government’s stake to 59.8 per cent from 61.7 per cent.
The UK government rescued RBS at the height of the 2008-09 global financial crisis with £45 billion of taxpayers’ cash in the world’s biggest banking bailout, initially taking an 82 per cent stake.