December 4, 2022

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UK public borrowing surges to fresh record high in August

FILE PHOTO: A man crosses the road in the City of London financial district amid the outbreak of the coronavirus disease (COVID-19), in London, Britain September 23, 2020. REUTERS/John Sibley

LONDON (Reuters) – British public borrowing rose to 35.920 billion pounds in August, a record high for the month though below its peaks earlier in the financial year, as the government dealt with the economic damage from the coronavirus pandemic.

July’s public borrowing figure was revised down by more than 11 billion pounds. But borrowing for the first five months of the financial year still rose further to its highest on record at 173.7 billion pounds, overtaking the annual total at the peak of the financial crisis.

The most recent forecast from Britain’s Office for Budget Responsibility estimates borrowing for the full financial year will be a record 372 billion pounds, equivalent to 18.9% of gross domestic product, a ratio not seen since World War Two.

Public sector net debt in August reached 2.024 trillion pounds or 101.9% of GDP, the highest as a share of the economy since the 1960-61 financial year.

Britain suffered the biggest economic hit of any G7 economy from the coronavirus during the second quarter of this year, with output collapsing by 20%, and the Bank of England estimates third-quarter output will be around 7% below pre-crisis levels.

Finance minister Rishi Sunak announced plans on Thursday that mean future support for furloughed workers will be much less generous, though he said the focus for now should be on restoring growth rather than the long-term public finances.

The British government’s borrowing costs on financial markets are near record lows, due to global gloom about the economic outlook and a long-term fall in interest rates.

Reporting by David Milliken and Andy Bruce; Editing by Alex Richardson

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