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UK borrowing at record high as virus cost soars in April

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UK borrowing at record high as virus cost soars in April 1

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The furlough scheme means the government is paying the wages of more than 6.3 million people

The government borrowed £62.1bn in April, the highest monthly figure on record, according to official figures.

It underlines the cost of coping with the coronavirus pandemic through jobs schemes and loans, and is double the forecast of many economists.

The cost of furlough schemes had the largest impact, hitting £14bn in April.

The government’s independent forecaster, the OBR, has said the gap between the UK’s borrowing and spending could hit £298bn this year.

Jonathan Athow, deputy national statistician at the Office for National Statistics (ONS), described April’s figure as “pretty much unprecedented”.

He told the BBC: “Borrowing now is about six times what it was [in April] last year, so we are talking about some really significant changes in the government finances.”

Mr Athow said it was impossible to forecast the current year’s public finances because of the “high amounts of uncertainty”. Tax receipts have fallen heavily, with the government deferring some payments, while Treasury income from VAT and air passenger duty are down significantly.

UK borrowing at record high as virus cost soars in April 2

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Media captionHow are we going to pay for the coronavirus mess?

Meanwhile, borrowing by the state in March 2020 has been revised up by £11.7bn to £14.7bn, the ONS said.

It said this was driven by a reduction in previous estimates of tax receipts and National Insurance contributions.

The surge in borrowing comes after Chancellor Rishi Sunak stepped up financial support for businesses and employees after vast areas of the economy were forced to halt due to the coronavirus lockdown.

After publication of the figures, he said that if the government had not provided financial support, the cost to the economy and people’s livelihoods would be much worse.

“Our top priority is to support people, jobs and businesses through this crisis and ensure our economic recovery is as strong and as swift as possible,” he said.

“That’s why we’ve taken unprecedented steps to provide lifelines to people and businesses with our furlough scheme, grants, loans and tax cuts.”

‘All poorer’

The scale of the economic consequences was underlined on Friday in separate retail sales data from the ONS. These showed that High Street sales crashed last month as shops closed for the lockdown.

It was also announced on Friday that a mortgage payment holiday scheme for homeowners in financial difficulty during the pandemic has been extended for another three months.

As a result of the jump in borrowing, total public sector debt rose to £1,888bn at the end of April – £118.4bn higher than April 2019.

Former chancellor George Osborne told the BBC: “We have to come to terms with the fact that Britain is poorer and the economy is smaller than it would have been.”

Asked if the economy would bounce back, he said: “Bounce is the wrong word, but it will recover.”

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