UK ANNUAL BORROWING HITS POST-WAR HIGH OF £303BN

Sat 24 April 2021:

The UK Treasury borrowed 303.1 billion Pounds ($421 billion) in the financial year ending in March 2021 to pay for the schemes the government implemented to keep workers in jobs and support businesses while trying to contain the COVID-19 pandemic, the Office for National Statistics (ONS) said on Friday.

“The coronavirus (COVID-19) pandemic has had a substantial impact on the economy and subsequently on public sector borrowing and debt,” the ONS’ report said.

Despite a £28bn gap between state spending and tax receipts in March, the Office for National Statistics (ONS) said the deficit for the 2020-21 year was £24bn less than the £327bn pencilled in at the time of the budget by the Office for Budget Responsibility (OBR).

As a percentage of national output, borrowing in the year between April 2020 and March 2021 stood at 14.5% – the highest since the financial year ending in March 1946, a period that covered the final few months of the second world war.

Higher government spending was responsible for the bulk of the £246bn increase in borrowing compared with the previous year, although the ONS said tax receipts had also fallen. Government debt – borrowing that has accumulated over the years – stood at £2.14tn at the end of March, almost 98% of national income.

Ruth Gregory, Capital Economics‘s senior UK economist, said: “The further rise in public borrowing in March rounded out the worst year for the public finances since 1947. But borrowing was £24.3bn lower than the Office for Budget Responsibility predicted just a month ago.

If we are right in thinking the economic recovery will be faster and fuller than the OBR anticipates, borrowing will probably also fall more quickly than the OBR expects further ahead.”

Under the government’s scheme to prevent massive layoffs during the COVID-19 pandemic, employers can apply for a grant to cover 80% of the salary of their employees that could not work due to the pandemic.

The initiative, which has benefitted millions of workers in the UK, was initially set to expire in April but has been extended until late September.