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Government borrowing hits record £208 billion in six months as UK battles Covid

 (PA)
(PA)

Government borrowing hit £36.1 billion last month, taking the total borrowed since April up to a new record of £208.5 billion as the cost of Covid-19 support packages hammered the country's finances.

Spending on projects such as the furlough scheme surged while tax revenues from companies and workers fell sharply. Takings for the Treasury were down £6 billion in September on the previous year with particularly big falls from VAT receipts, business rates and corporation taxes.

The public debt is now £2.06 trillion, or 103.5% of the country's entire gross domestic product. That marks the highest ratio of debt to GDP since 1960.

The government has been offering tax relief to hundreds of thousands of businesses to help them get through the crisis.

Office for National Statistics data showed the state-sponsored furlough job retention scheme, which comes to an end this month, cost £4.9 billion in September alone. The Self Employment Income Support Scheme cost £1 billion.

Overall borrowing, measured as Public Sector Net Borrowing, was estimated at £208.5 billion since April, some £174.5 billion more than a year ago.

The Office For National Statistics said: "The Covid-19 pandemic has had an impact on public sector borrowing that is unprecedented in peacetime."

It pointed out that borrowing since April was four times the £54.5 billion borrowed in the whole of the previous year, with central government tax receipts and National Insurance contributions down 11.6%.

The Office for Budget Responsibility has estimated that borrowing for the full year could hit £372.2 billion - around seven times last year.

The data came as lockdowns spread across the country, damaging further the profits and tax dues from companies and the people they employ.

They added weight to Chancellor Rishi Sunak's reported concerns that Prime Minister Boris Johnson should scrap his plans for an autumn three year spending review given the chaos that Covid is wreaking on the public finances.

Having launched his widely praised schemes to protect workers and employers in the early stages of the pandemic, he is now reining them in for fear of the spiralling costs.

However, the country's plight is being eased by super low interest rates, which are meaning Sunak can borrow cheaply on the global debt markets.

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