Government borrowing has hit a record high (Picture: Reuters)
More than £300 billion has been borrowed in the past year as the fight against coronavirus put huge demands on the public purse strings. Official figures show borrowing has soared to £303 billion in the year to the end of March – the highest level since the Second World War. According to the Office for National Statistics (ONS), the UK’s debt currently stands at 97.7% of Gross Domestic Product – a level not seen since the early 1960s.
The start of the financial year was dominated by the pandemic, with the UK entering its first lockdown at the end of March 2020. It forced hug parts of the economy into a standstill as the NHS grappled with surging hospital admissions.
Further lockdowns in November and January have required billions extra in funding to fend off a tsunami of job losses and business closures. The furlough scheme has so far cost the taxpayer around £58 billion, according to data from last month.
KPMG senior economist Michal Stelmach said: ‘Rising debt is largely unfortunate consequence of the Government’s focus on shielding the economy as much as possible from the impact of Covid-19. ‘However, doing otherwise could have created long-lasting scars which would be far worse for fiscal sustainability.’
As well as the furlough scheme and other support grants, extra money was also spent on the NHS, Test and Trace and vaccines. The recent easing of restrictions has been seen as a welcome boost to the battered economy.
Experts hope a consumer spending spree will kick-start recovery. But Chancellor Rishi Sunak has hinted tax hikes are to come to start plugging the giant hole in the nation’s finances.