The Courier & Advertiser (Fife Edition)
Chancellor defends his actions as UK debt hits highest level since 1960
The UK’s national debt hit a record £2.06 trillion at the end of September, up £259.6 billion in six months, according to new data from the Office for National Statistics (ONS).
It pushed borrowing up to 103.5% of gross domestic product (GDP) after the public sector borrowed around £36 .1bn in September – pushing the debt to GDP ratio to the highest level since 1960.
This was £28.4bn more than the same month a year ago and the thirdhighest month of borrowing since records began in 1993, officials added.
At the end of September there was £ 1 .74 1 t n of central government bonds, or gilts, in circulation to prop up the falling tax take and cover the huge expenditure related Covid-19 spending.
Central government tax receipts were £37.7bn in September – £ 6bn less than in September 2019, with large falls in VAT), bus iness rates and corporation tax receipts, the ONS added.
The Government is expected to have spent £77.8bn in September on day- to- day ac tivities – £ 18.1bn more than in September 2019 – including £4.9bn on the furlough scheme and £1bn on the self-employment support scheme payouts.
Borrowing in the first six months of this financial year – April to September – is es t ima ted a t £208.5bn, £174.5bn more than in the same period last year and the highest borrowing in any April to to
September period since records began in 1993. Each and every month set a new record, the ONS added.
Chancellor Rishi Sunak said: “Whilst it’s clear that the coronavirus pandemic has had a significant impact on our public finances, things would have been far worse had we not acted in the way we did to protect m i l l ions of livelihoods.
“I’ve been clear that our enduring priority is to protect as many jobs and businesses as possible through this pandemic, which is the fiscally responsible thing to do.
“T h r o u g h o u r comprehensive Plan for Jobs we’re protec ting , supporting and creating millions of jobs across the country.
“Over time and as the economy recovers, the government will take the necessary steps to ensure the long-term health of the public finances.”
E conom i s t s and commentators said the news was not as bad as first thought but warned that a significant second wave cou ld have further damaging effects.
Alison Ring , of the Institute of C har tered Accountants in England and Wales, said: “T he economic damage caused by the pandemic in the first half of the fiscal year was not as bad as originally feared, thanks in part to the extraordinary level of financial support provided by the chancellor.
“However, the wave is putting strain on the second further public finances as new regional restrictions are placed on economic activity.”
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, pointed out that the cost of the Job Retention Scheme and the Self-Employment Income Support Scheme were slightly lower than the O f f ice for Budge t Responsibility (OBR) forecasts.
He added: “Expenditure will pick- up if Tier 3 restrictions are imposed in more regions, as hospitality businesses that are forced to close in these areas will be able to furlough staff with state support again.
“In the round then, the OBR’s forecast for public borrowing of £ 372bn – probably close to 16% of GDP – still looks about right.”