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Summary
- UK government’s public sector net borrowing hit £22.3 billion in October 2020, highest since monthly records began in 1993
- UK’s overall debt at the end of October 2020 was equivalent to 100.8 per cent of GDP
- ONS data shows the public borrowings for the first seven months of this financial year was about £214.9 billion
The British government’s public sector net borrowing has hit £22.3 billion in October 2020, £10.8 billion more than what it was in October 2019.
The figure indicates the highest October borrowing since monthly records began in 1993, according to the data released by the Office for National Statistics (ONS). The UK’s overall debt at the end of October 2020 was equivalent to 100.8 per cent of gross domestic product (GDP). The huge rise is in the wake of the coronavirus pandemic, which prompted the government to support economic activity.
The ONS data also suggested that the public borrowings for the first seven months of this financial year (from April to October 2020) was about £214.9 billion, which is £169.1 billion more than in the same period in 2019 and highest for the period since records began in 1993.
Chancellor Rishi Sunak said that the UK government had provided £200 billion of support to safeguard the economy, business activities, lives and livelihoods in the wake of the COVID-19 pandemic. However, he stressed that over time, the government has to ensure that the sustainability of the public finances is not hindered.
Meanwhile, many experts feel that increasing public borrowing is making things difficult for Sunak to balance the situation, especially when there is a spending review going to be held on 25 November.
In view of these figures, it is anticipated that Chancellor Sunak may use the spending review to restrict the pay rise for 5 million public sector employees for 2021-22, to support rebuilding the public finances.
Earlier in the first week of November, the Bank of England (BoE) had decided that it will inject fresh stimulus of £150 billion into the UK economy in the wake of the second lockdown.
Also read: UK national borrowings grow as coronavirus support continues
Coronavirus impact
The COVID-19 pandemic has already crippled the UK’s economy, and frequent lockdowns are adding more woes to the country’s struggling economic activities. Recently, a survey conducted by Reuters suggested that the UK is going into a double-dip economic downturn.
The UK, which tops the list of coronavirus related deaths in Europe, is facing extreme economic hardships after the government announced the second national lockdown, hampering economic activity.
And, with the new lockdown in place, the country’s major service sector is compelled to remain close for most of November. This will further add woes to the business activities in the country and impact their revenue to a large extent.
Also, a report by ONS’ Business Impact of Coronavirus (COVID-19) shows that 14 per cent of the country’s businesses feel that there are not sure whether their businesses would survive the next three months.
