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Triple shot of good economic news boosts hope for the summer

Simon English
·2-min read
The Bank of England (Yui Mok/PA) (PA Wire)
The Bank of England (Yui Mok/PA) (PA Wire)

THE UK economy is bouncing back from Covid-19 faster than expected, a triple dose of good news showed today.

The latest figures show the government borrowed £303 billion in the year to March, the highest level since the end of World War II.

While the amount borrowed is undeniably high, it is much lower than the £394 billion forecast as recently as November.

And UK retail sales continued to rebound in March, up 5.4% on February, with garden centres, butchers and bakers proving popular, according to the data.

Those figures are for before non-essential shops re-opened, suggesting the stats for April are likely to be strong.

Paul Dales are Capital Economics said: “We think a surge in retail sales in April will mark the start of a rapid economic recovery that may mean the extra tax hikes and spending cuts that most fear may not materialise.”

Also today there was a surge April’s flash composite PMI suggesting momentum is growing. The increase in the IHS Markit/CIPS measure of activity from 56.4 in March to 60.0 in April was also better than predicted.

Darren Morgan, ONS director of economic statistics, added: “The approaching spring enticed people into garden centres, which had a good month, while clothing sales sprung back to life as people looked to update their wardrobe.”

Chancellor Rishi Sunak has benefitted from very low borrowing costs. But since much of the debt is held by the Bank of England, if the Bank itself puts interest rates up, the costs of servicing the debt immediately rises.

But the stats show that interest payments on debt by central government were £38.8 billion in the year to March 2021, £9.3 billion less than a year ago.

As a percentage of GDP, borrowing is at 14.5%. It hit 15.2% in 1946.

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