Deficit at record high

PANDEMIC spending pushed the public deficit to its highest level in modern peacetime – but the total was lower than experts feared.

Government net borrowing reached £303.1billion last month, up by £246billion in a year, says the Office for National Statistics.

But the tally was less than the Office for Budget Responsibility’s forecast of £354.6billion.

Hopes of a bounce back were raised after official figures showed shoppers went on a spending spree in March ahead of lockdown easing.

A study showed the private sector growing at its fastest for eight years.

The Government has spent billions propping up the economy, including £58billion on furlough.

Increased borrowing pushed net public debt up to £2,141.7billion, 97.7 per cent of national income.

KPMG senior economist Michal Stelmach said rising debt was a consequence of shielding the economy from Covid-19.

He added: “However, doing otherwise could have created long-lasting scars which would be far worse for fiscal sustainability.”

The Government is hoping pent-up demand will be unleashed.

Shoppers in March spent 7.3 per cent more than the same month last year, said the ONS.

Kallum Pickering, an economist at Berenberg, said: “Spring has sprung for the UK economy. Led by a rapid recovery in domestic demand, the UK is building serious recovery momentum into the summer.”

A study that monitors the private sector showed it is growing at its fastest rate since 2013.

The Purchasing Managers’ Index rose from 56.4 in March to 60 in the first weeks ofApril.Any score above 50 means that the sector is growing.

Companies are hiring staff again but customers face rising prices.