The coronavirus pandemic has severely undermined Britain’s public finances with the government’s debt exceeding £2tn for the first time and borrowing at its highest ever peacetime level.
The Office for National Statistics on Friday reported that public sector net debt rose another £20.2bn to hit £2.004tn in July. It is now higher than the annual value of goods and services produced in the UK.
Although the rate of monthly borrowing was described by Ruth Gregory, senior UK economist at the consultancy Capital Economics, as “another huge sum”, it is lower than that expected by the Office for Budget Responsibility, the fiscal watchdog, with signs that better than expected consumer spending is supporting some tax revenues.
The best measure of the deficit was still running at a very high level in July. The central government’s net cash requirement, the amount of cash it has had to raise to finance its activities, in the month was £25.5bn. This has deteriorated £33.6bn compared with the same month a year ago, when the government ran a surplus in July.
Since the start of the financial year in April, the cash requirement has hit £199.5bn, a figure higher than the previously worst full year, in 2009/10. But the level of recorded borrowing is running at a rate almost £30bn…