£500,000,000,000

Borrowing binge to hit half a trillion pounds this year

GOVERNMENT borrowing is set to balloon to a record £500bn this year as fresh lockdowns slam the economy into reverse.

As businesses brace for a bleak winter of coronavirus restrictions, analysts warned the budget deficit will be even higher than feared as tax receipts plummet and Chancellor Rishi Sunak plunders the public purse to support livelihoods.

The borrowing binge – by far the highest on record, dwarfing the £158bn deficit in 2009-10 during the financial crisis – will push the national debt further above £2 trillion. The debt pile is already larger than the economy for the first time since the 1960s. Economists also warned of a double-dip recession and soaring unemployment after Boris Johnson put business back in the deep freeze with an England wide lockdown.

Fears over the outlook came as the CBI business group kicked off its annual meeting. As the online conference began, CBI director-general Dame Carolyn Fairbairn warned of a ‘bleak midwinter’ for businesses starved of income by the latest restrictions.

Lord Bilimoria, CBI president and founder of Cobra Beer, urged the Government to use the opportunity to roll out cheap testing so businesses could open safely and further restrictions could be avoided.

Economists predicted a second lockdown would cause output to contract again in the fourth quarter of the year, undoing the gains made over the third quarter.

Douglas McWilliams, deputy chairman and founder of the Centre for Economics and Business Research (CEBR), thinks the deficit could hit £500bn in 2020.

Analysts at Goldman Sachs think the British economy will shrink by 2.4pc in the last three months of 2020, while Citigroup analysts fear an even gloomier 4pc contraction.

But while businesses battle through the month-long lockdown, the Government has agreed to extend various support schemes available.