25 Sep 2020
Public borrowing in the UK jumped to £35.920 billion in August, hitting a record high for the month but still lower than highs seen earlier during the financial year.
Public borrowing in July was downwardly revised by more than £11 billion. However, borrowing for the first five months of the financial year still climbed to a record high of £173.7 billion, surpassing the annual total at the height of the financial crisis, Reuters reports.
According to the most recent estimate from Britain’s Office for Budget Responsibility, borrowing for the full financial year is expected to reach a total of £372 billion, or in other terms, 18.9% of gross domestic product.
Public sector net debt in August was seen reaching £2.024 trillion, or 101.9% of GDP – the highest level since the 1960-61 financial year.
The British economy was hit the worst out of all G7 economies, as a result of the coronavirus pandemic during the second quarter of this year. Output fell 20%, while the Bank of England forecasts third-quarter production will still be roughly 7% below pre-coronavirus levels.
On Thursday, finance minister Rishi Sunak announced plans for additional support for furloughed workers, but stated that the measures will be less generous than the current furlough scheme, which is due to expire at the end of next month.
Sunak noted that the focused right now will be directed towards restoring growth, rather than long-term public finances.
The government’s borrowing costs on financial markets are hovering close to record lows, attributed to a long-term drop in interest rates and a dim outlook on the global economy.