Prepare for ballooning state debt, warns ONS as borrowing to grow

Chancellor Rishi Sunak overshot the UK Government’s fullyear borrowing target after the highest March figure for four years as Britain braces for ballooning public debt from mammoth coronavirus emergency measures.

The Office for National Statistics (ONS) said public sector borrowing, excluding banks owned by the state, jumped £9.3 billion to a higher-thanforecast £48.7bn in the financial year to 31 March.

Borrowing surged to its highest March level since 2016 last month at £3.1bn – compared with an £891 million surplus a year earlier. The March hike saw borrowing for the full year come in higher than the £47.4bn forecast by the independent fiscal watchdog, the Office for Budget Responsibility (OBR).

But the ONS warned the figures do not yet take into account the expected “significant” impact of Covid-19 government action launched late last month, and said the March figure is likely to be revised higher in coming months.

It comes after the OBR last week said the budget deficit could soar by £218bn this financial year to £273bn, or 14 per cent of gross domestic product (GDP) – the largest single-year deficit since the Second World War.

The ONS said: “The coronavirus pandemic is expected to have a significant impact on the UK public sector finances.

“These effects will arise from both the introduction of public health measures and from new Government policies to support businesses and individuals.” It added: “The full effects of Covid-19 on the public finances will become clearer in the coming months.”

The borrowing figures do not yet show the extra healthcare spending figures, while the Covid-19 measures are not yet factored in as they were only launched in late March.