Government borrowing to tackle virus hits record £63.1 billion

Government borrowing surged to £62.1 billion to April - the highest figure for any month on record - after heavy spending in the face of coronavirus, according to new figures.

The Office for National Statistics (ONS) said public sector borrowing - excluding banks owned by the state - was £51.1bn higher than the same month last year.

The figure is significantly higher than analysts had predicted, with a consensus of economists predicting £30.7bn for the month.

However, it is slightly lower than the £66.6bn estimate made by the Office for Budget Responsibility (OBR) last month.

It comes after the Chancellor stepped up financial support for businesses and employees after vast areas of the economy were forced to halt due to the coronavirus lockdown.

A fall in tax receipts also significantly contributed to the rise in borrowing, with central government receipts sliding by 26.5 per cent for the month compared to April 2019.

This was driven by a combination of contracting economic activity, rising unemployment and weaker earnings, and tax breaks given to companies in response to the lockdown.

The ONS also cautioned that its first estimate of borrowing April could be significantly revised as the full impact of the outbreak becomes clearer.

Meanwhile, borrowing by the state in March 2020 has been revised up by £11.7bn to £14.7bn by the ONS.

It said this was driven by a reduction in previous estimates of tax receipts and National Insurance contributions.

As a result of the jump in borrowing, public sector debt rose to £1,887.6bn at the end of April - £118.4bn higher than April 2019.

The ONS said that the Government borrowed £62.7bn overthe12monthstotheendof March, representing a £22.5bn rise on the previous year.

Last month, it jumped £9.3bn to a higher-than-forecast £48.7bn in the financial year to 31 March.

Charlie Mccurdy, a researcher at the Resolution Foundation, said: “The latest borrowing figures offer a stark illustration of the fiscal costs of coronavirus and the lockdown measures required to contain it, with the Government borrowing as much last month as it during the whole of last year.

“But while there is significant pressure on the public finances, there are no signs that the Government is struggling to find the cash.

“Record low interest rates mean the UK’S higher debt burden should remain more than manageable.”

The news came as it was announced that borrowers taking a three-month mortgage payment holiday are set to be able to extend it for another three months, or start making reduced payments.

Three-month mortgage payment holidays are already available for borrowers who are struggling due to the financial impact of coronavirus.

But the Financial Conduct Authority (FCA) has now proposed that, for customers who have not yet asked for one, the time to apply for one would be extended until October 31.

The current ban on homes being repossessed will also be continued until October 31 under the plans.

For those who are still experiencing temporary payment difficulties due to coronavirus, firms should continue to offer support - which could include extending a payment holiday by a further three months or starting to make reduced payments under the proposals.

More than 1.8 million mortgage payment holidays have been taken up, and the first of these are due to come to an end in June.

At the end of a payment holiday, firms should contact their customers to find out if they can resume payments and if so, agree a plan.