Deficit may top £440bn this year

GOVERNMENT borrowing could top £660bn over the next two years as the cost of the pandemic spirals.

In its latest update, the Office for Budget Responsibility (OBR) laid out the potential damage which coronavirus will cause to the public finances.

In its central forecast, public sector borrowing will shoot up to £372.2bn this financial year and £155.7bn next year.

Borrowing will not fall below £100bn for five years, as the UK tries to prevent the economy stagnating.

But the OBR warned that in the worst-case scenario, borrowing could rise as high as £441.4bn this year and £220.4bn next year.

Its outlook becomes even more bleak over the long term, as the OBR predicts debt will rocket as the UK struggles to cope with its ageing population.

In 50 years, the Government could be borrowing more than five times the size of the economy every year, according to the OBR.

That could mean public borrowing would hit more than £10trillion by 2069.

The OBR said that the UK was ‘clearly on an unsustainable path’, and added that taxes would have to rise by around £60bn every decade.

Chancellor Rishi Sunak has ruled out any major changes to taxes for now, as the Government is desperate for households to start spending again.

But Sunak wrote to the Office of Tax Simplification yesterday, requesting a review of capital gains tax rules. Individuals and businesses have to pay the tax when they sell or transfer an asset, such as a painting or property that isn’t their home.