The UK government has been forced to borrow almost £130bn between April and June to combat the coronavirus pandemic, more than double the amount it did over the whole of last year.

Setting out the scale of the economic shock unleashed by the virus, the Office for National Statistics said public borrowing in the first quarter of the 2020-21 financial year jumped to £127.9bn, the highest quarterly sum since comparable records began in 1993.

According to the latest snapshot, borrowing in June was £35.5bn, roughly five times the level in the same month a year ago, albeit a gradual decline from even higher levels of borrowing in April and May during the earlier stages of the pandemic.

The chancellor, Rishi Sunak, said that despite the impact on public finances it was important to continue supporting the economy to cut the chances of long-term scarring for jobs and growth.

However, paving the way for potential cuts to spending or higher taxes in future, he warned: “I am also clear that over the medium term we must, and we will, put our public finances back on a sustainable footing.”

Speculation has been mounting that Sunak could use his autumn budget later this year to either raise taxes or launch a renewed austerity drive to pay for the government response to Covid-19, as the state steps in with billions of pounds of financial support to soften the economic blow.

Britain’s national debt – the sum total of every annual deficit in history – increased by £195.5bn year on year to almost £2tn, roughly equalling GDP, and standing at the highest level as a share of the economy since 1961.

However, experts have warned warn that cutting back spending or raising taxes too soon risks choking the economic recovery before it fully takes hold. Economists argue that higher levels of borrowing can be sustained by cheaper borrowing costs for the state, helped by the Bank of England’s quantitative easing bond-buying programme.

Jeremy Thomson-Cook, the chief economist at financial services firm Equals, said debt levels did not matter in the short term. “If your house is on fire you do not tell the fire brigade to only use a certain amount of water,” he said.

“The UK economy continues to burn, and the government’s spending taps need to remain open for the foreseeable future in order to give businesses and consumers every opportunity to support each other as we gradually return to normality.”

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

Cyclone on 1st deployment since fatal crash grounded, ‘temporarily unserviceable’

The CH-148 Cyclone helicopter accompanying HMCS Toronto on its latest NATO mission is “temporarily unserviceable for maintenance reasons,” the Department of National Defence said Tuesday. The deployment of the maritime helicopter was considered an important step forward in returning the…

UK enters ‘delay’ phase of coronavirus response, says Sturgeon

Nicola Sturgeon has announced the UK is escalating its response to the coronavirus outbreak, with people showing symptoms asked to self isolate for seven days from Friday. In a speech which pre-empted an official announcement from Boris Johnson, Ms Sturgeon said the UK…

Boris Johnson brushes off Tory revolt over Dominic Cummings

Boris Johnson has brushed aside a growing revolt of almost 100 of his own MPs and defied ongoing calls for Dominic Cummings to be sacked, despite a police investigation that failed to exonerate him for a potential breach of lockdown.…

Barrett confirmation hearing heats up with more tense exchanges over ObamaCare

Fox News’ team coverage provides insight into the Supreme Court confirmation hearing for Judge Amy Coney Barrett. The Supreme Court confirmation hearings for Judge Amy Coney Barrett heated up Wednesday afternoon with more tense exchanges over the Affordable Care Act (ACA),…