government debt

UK borrowing hits record £128 billion during lockdown

Agence France-Presse, Agence France-Presse
UK borrowing hits record £128 billion during lockdown

A man wearing a mask as a precaution against the transmission of the novel coronavirus rides a scooter on Oxford Street in London on July 14, 2020. - Face masks will be compulsory in shops and supermarkets in England from next week, the government said on July 14, in a U-turn on previous policy. (Photo by JUSTIN TALLIS / AFP)

'Over the medium term, we must, and we will, put our public finances back on a sustainable footing,' says British finance minister Rishi Sunak

British state borrowing rocketed to a record £127.9 billion in the 3 months to June owing to the huge cost of emergency coronavirus stimulus measures, official data showed Tuesday, July 21.

Public sector net borrowing – the government’s preferred measure of the deficit – soared to the equivalent of $161 billion or 141 billion euros in the 1st quarter of its 2020/2021 fiscal year, the Office for National Statistics (ONS) said in a statement.

That was a record for the period and more than double the entire 2019/2020 deficit of £55.4 billion.

Britain imposed a nationwide lockdown on March 23 that it did not start relaxing until early June.

Borrowing reached £35.5 billion in June, a fivefold increase from the same month in 2019.

However it was an improvement from £45.5 billion in May, as the economy began to recover.

Total public debt meanwhile leapt to £1.983 trillion at the end of June, or 99.6% of gross domestic product. That was the highest proportion since 1961, according to the ONS.

“It’s clear that coronavirus has had a significant impact on our public finances, but we know without our response things would have been far worse,” finance minister Rishi Sunak said.

“The best approach to ensure our public finances are sustainable in the medium term is to minimize the economic scarring caused by the pandemic.

“I am also clear that, over the medium term, we must, and we will, put our public finances back on a sustainable footing,” he added.

In response to the COVID-19 outbreak, the government launched a multibillion-pound series of stimulus measures to protect jobs and the broader economy.

As part of its stimulus program, the government created a costly jobs retention scheme, under which it pays most of salaries.

Some 9.4 million UK workers have had up to 80% of their wages paid by the UK government under its so-called “furlough” scheme, which ends in October.

The country is currently in the final stages of rolling back coronavirus restrictions, with emphasis on the hospitality and tourism industries.

Britain has suffered Europe’s deadliest coronavirus outbreak with around 45,000 deaths. – Rappler.com