Net debt has risen by £333 billion since the pandemic began
National debt has soared to a staggering £2.1 trillion with the amount borrowed hitting a record high last month. Government borrowing hit £19.1 billion in February alone – the highest amount than during any other February since 1993. While borrowing has shot up, income from taxes has dwindled as the pandemic continues to hit jobs and incomes. It means that net debt has risen by £333 billion since last April when the Covid-19 lockdowns began, bringing the total to £2.131 trillion. The figures published by the Office for National Statistics (ONS) do not include the £27.2 billion pounds of Covid loan write-offs which the Office for Budget Responsibility (OBR) estimates will need to be made. ONS finance statistician Fraser Munro said: ‘The recent large increase in borrowing has led to sharp rise in the debt. The UK’s debt currently stands 97.5% of gross domestic product (GDP) – maintaining a level not seen since the early 1960s and almost the size of the UK economy in 12-month period.’
The recent large increase in borrowing has led to sharp rise in the debt. The UK’s debt currently stands 97.5% of gross domestic product (GDP) – maintaining a level not seen since the early 1960s and almost the size of the UK economy in 12-month period. At least 50 schemes have been announced by central government and the devolved administrations to support individuals and businesses during the pandemic. Chancellor Rishi Sunak ramped up efforts to help people get through the second wave at his Budget on March 3, when he announced the furlough and business rates relief schemes will be extended until the end of September. According to the ONS, £74.4 billion has been spent on furlough schemes in the financial year to February 2021. The ONS said the extra funding required by coronavirus support schemes ‘combined with reduced cash receipts and a fall in gross domestic product (GDP)’ have all helped push public sector net debt as a ratio of GDP to levels not seen in 60 years.
Chancellor Rishi Sunak, who has overseen the Treasury’s response to the pandemic, defended the Government’s high spending. Responding to the figures he said: ‘Coronavirus has caused one of the largest economic shocks this country has ever faced, which is why we responded with our £352 billion package of support to protect lives and livelihoods. ‘This was the fiscally responsible thing to do and the best way to support the public finances in the medium term. ‘But I have always said that we should look to return the public finances to a more sustainable path once the economy has recovered, and at the Budget I set out how we will begin to do just that, providing families and businesses with certainty.’
Mr Sunak has signalled that tax rises are likely in the coming years and has already announced a plan to increase corporation tax from 19% to 25% for large companies by 2023. The ONS figures come after the Bank of England said the outlook for the UK economy post-lockdown looks ‘uncertain’, despite the rapid rollout of vaccines. It said it expected an economic rebound as restrictions are lifted and Government support for jobs continues. But it said the recovery still depended on the ‘evolution of the pandemic’ and measures to protect public health. The Stay at Home message in England will end on March 29, when people will be allowed to meet in groups of six outdoors. Shops, hairdressers and beer gardens can open from April 12, with all restrictions set to be lifted by June 21 at the earliest. Boris Johnson has said his roadmap out of lockdown is ‘irreversible’. But he has refused to rule out implementing another one, saying he can’t guarantee there won’t be further difficulties ahead. – metro.co.uk