Yahoo Finance Coronavirus: UK debt pile reaches £2.1 trillion
UK public borrowing hit its highest November level since records began in the early 1990s, as tax receipts dropped and furlough costs racked up.
The latest data from the Office for National Statistics (ONS) shows the UK government borrowed £31.6bn ($41.69bn) in November, with borrowing levels higher than the previous month and than analysts’ expectations.
Business rates and VAT income dropped with lockdowns in force in large swathes of the UK for much of November.
It comes as separate GDP figures from the ONS show the economy rebounded more than expected by analysts between July and September. Third-quarter GDP data shows the UK economy expanded by 16% compared to the previous quarter.
The government has been forced to issue new debt to cover the wide-ranging costs of the pandemic, from the furlough scheme and bailouts for rail firms to support for the NHS.
Borrowing has also propped up other spending with tax receipts plummeting, as many firms’ revenues have collapsed and many tax payments have also been deferred.
READ MORE: UK needs £40bn tax hikes as economy ‘cannot be fully protected’
It comes a week after UK chancellor Rishi Sunak extended the furlough scheme by another month to April next year. The coronavirus job retention scheme, as it is formally known, has seen the UK government seek to limit mass unemployment by subsidising 80% of wages for workers at risk of redundancy.
More than 1.2 million employers had claimed £46.4bn to protect the jobs of 9.9 million staff as of early December, with 30% of the workforce furloughed at its peak in May.
The scheme was due to run to October but has repeatedly been extended, with the Treasury under pressure as the pandemic has dragged on.
The latest Tier 4 curbs in parts of England and tighter restrictions in Wales, Scotland and Northern Ireland have been predicted to cost the economy £900m a day. The hit to economic activity could further push up the debt-to-GDP ratio, a key metric of the public finances.
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The latest data shows public sector net debt at 99.5% of GDP, the highest level since the early 1960s.
The UK chancellor Rishi Sunak has announced billions' in new and extended COVID-19 financial relief measures at multiple set-piece speeches this year. He has defended spending as vital to safeguard firms and jobs, but has also frequently highlighted the need to eventually bring borrowing and debt levels down.
He said on Tuesday: “As part of our Plan for Jobs we’ve invested £280bn to protect millions of jobs and businesses across the UK.
“This is the right thing to do to protect lives and livelihoods during this acute phase of the crisis.
“When our economy recovers, it’s right that we take the necessary steps to put the public finances on a more sustainable footing so we are able to respond to future crises in the way we have done this year.”
