Jump in borrowing expected

OFFICIAL figures are expected to show a jump in borrowing by the UK Government after England’s second lockdown saw more workers furloughed and firms seek state support.

The Office for National Statistics (ONS) will disclose the scale of borrowing in November and the state of the UK deficit in an update tomorrow.

In its previous update in October, the organisation revealed a decrease in monthly borrowing to £22.3bn.

However, economists have predicted that greater economic support to deal with tightened coronavirus restrictions and lockdown measures will have piled more pressure on to public sector finances.

Analysts at Investec have forecast that public sector net borrowing will surge to £31.4bn for November, about £26bn higher than the same month last year.

They said that November’s figures are set to be lifted by “a rise in the takeup of the furlough scheme”, which was extended beyond October and will now continue until April 2021.

On Thursday, HMRC said another £3.4bn worth of claims were made between November 15 and December 13, taking total claims to £46.4bn and 9.9 million furloughed jobs.

Investec said that although the winding-down of programmes is likely to reduce borrowing, they still expect the Chancellor to address concerns over fiscal sustainability with “a selected rise in taxes at some stage”.

This financial year, borrowing has risen by an average of £24.2bn compared with the same month last year.

If borrowing continues at this pace, the UK’s deficit would reach £346bn over 2020-21 as a whole, although the Office for Budget Responsibility (OBR) forecast £394bn in its spending review as borrowing could still accelerate.