UK debt climbs in June amid coronavirus pandemic

0
108
UK debt climbs in June amid coronavirus pandemic.

The UK government borrowed £35.5bn in June, about five times more than the same month last year, as coronavirus continued to weigh on public finances.

The figure took total government debt to a record £1.98 trillion.

However, the monthly borrowing figure was lower compared with May and was in line with expectations.

The re-opening of non-essential retailers and other businesses in June saw a drop in furlough scheme spending and a rise in tax take.

Nevertheless, the June borrowing figure was still the third highest since records began in 1993.

The Office for National Statistics (ONS) warned that its borrowing estimates are currently “subject to greater than usual uncertainty”.

It has revised down May’s borrowing figure by £9.8bn to £45.5bn, mainly because tax receipts and National Insurance contributions were higher than previously estimated.

Presentational grey line
Analysis box by Dharshini David, global trade correspondent

Saving lives and livelihoods doesn’t come cheap.

As businesses reopened in June, some were able to wean themselves off state support. But that still meant the deficit for the first quarter of this financial year was more than twice that for last year as a whole.

And there’s more to come. Economists say the chancellor’s Plan for Jobs, the package intended to support firms and workers as the furlough schemes are wound down, won’t be enough to stem the spread of layoffs.

With even Rishi Sunak’s own forecasters predicting joblessness could top four million, many expect extra help will have to be unveiled in the Autumn Budget.

Then what? Already, the deficit is likely to top £300bn this year. There is a limit to how much the government can and will borrow cheaply to plug that.

The chancellor today repeated his vow to get the coffers back on to a sustainable path of in the “medium term”. With austerity out of fashion, that’s code for tax rises when he thinks the economy can bear it. The question is not only when that will be – but how much.

Chancellor Rishi Sunak said: “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.

“The best approach to ensure our public finances are sustainable in the medium-term is to minimise 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.”

LEAVE A REPLY

Please enter your comment!
Please enter your name here