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Summary
- The UK government borrowed £19.1 billion in February, the highest since 1993.
- The fiscal deficit for the first 11 months of the financial year was at £8 billion, up 6% year-on-year.
- According to the data, the government spent £3.9 billion only on job support schemes in February.
The Boris Johnson government borrowed £19.1 billion in February 2021, £17.6 billion higher than the same period last year. The February borrowing amount was the highest since 1993, reflecting the financial implications of pulling the economy through the Covid-19 pandemic after the UK went through the third lockdown and lots of business still waiting to operate.
Data published by the Office for National Statistics (ONS) showed that the first 11 months fiscal deficit for the financial year was at £278.8 billion, up by about six times of what was borrowed in the same period last year. The net debt was at 97.5 per cent of GDP was the highest since 1960. According to the ONS data, the government last month spent £3.9 billion only on job support schemes.
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Also read: Budget 2021: What did Rishi Sunak miss out?
The ONS data also highlighted a drop in tax income, primarily on account of lower fuel duty, VAT, and business rates. However, tax receipts from tax payments by the self-employed increased by £900 million from a year ago.
Chancellor of the Exchequer Rishi Sunak said that the pandemic sent economic shock waves through the country and the government’s £352-billion package safeguard livelihoods was a fiscally responsible action and the best action in support of public finances in the medium term.
Though Sunak’s latest budget laid the roadmap for hefty tax hikes 2023 onwards, the latest government data shows the financial repair that awaits the government after one of the UK’s biggest economic crisis in three centuries.
The latest data showed that public borrowing would end up mirroring the Office for Budget Responsibility’s forecast of £355 billion for the FY2020-21.
Also read: Budget 2021: Tax hikes to take burden to highest value since 1960s, says OBR
The economic support provided to businesses and households, including through the budget, stood at £344 billion, apart from the tax breaks promised for economic recovery in the next couple of years.
Liberal Democrats’ Treasury spokesperson Christine Jardine said that the data reflects the extent of economic damage but warned the government that it could not use it as an excuse to withdraw financial aid, as several small businesses would remain closed for months and jobs are still uncertain.
Also read: Budget 2021: Why Pub Businesses Are Unhappy with Rishi Sunak’s Grants
The Bank of England reiterated that despite an uncertain outlook, the economy was doing better than what it had expected a few months ago, primarily because of the accelerated vaccination programme.
Experts said that though the data showed the UK’s financial crisis, but Sunak was doing the right thing in continuing with the support schemes, given the state of the economy and if the damage could be limited at present, it would make the country better suited to deal with the debt.
