The UK government borrowed a record £62bn in April as the coronavirus pandemic takes a toll on economies across the world.
The April borrowing is more than the budgeted deficit for the full year.
The Office for Budget Responsibility forecasts UK government’s borrowing for the whole year will hit £298bn. That would be five times what was budged for the year. Jonathan Athow, the deputy national statistician at the Office for National Statistics, termed the April borrowing as “pretty much unprecedented.”
Athow also referred to “high amounts of uncertainty.” Government tax receipts are falling, even as it financially supports individuals and businesses through the pandemic.
Chancellor Rishi Sunak (pictured) said: “We’ve taken unprecedented steps to provide lifelines to people and businesses with our furlough scheme, grants, loans and tax cuts.”
The pandemic has led to a reversal in the UK government’s fiscal tightening policy, in line with most government’s around the world it has moved to bolster its shocked economy. According to the IMF, governments globally have announced $9trn worth of stimulus to shore up their economies.
“We have to come to terms with the fact that Britain is poorer and the economy is smaller than it would have been,” former chancellor George Osborne told the BBC.
Meanwhile, borrowings should ease now as business activity is gradually restarting. Also, interest rates have fallen and many expect them to enter the negative territory. Lower interest rates make borrowing cheaper.
Charlie McCurdy, a researcher at the Resolution Foundation, said: “Record low interest rates mean the UK’s higher debt burden should remain more than manageable.”
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