UK borrowing falls in April, to £31.7bn, as Covid-19 costs remain high – business live

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Britain’s borrowing hit its second highest level for an April ever, as the cost of tackling the Covid-19 pandemic and protecting the economy continues to rise.

Public sector net borrowing last month is estimated to be £31.7bn, figures released by the Office for National Statistics this morning show. That’s £15.6bn less than in April 2020, when Britain borrowed around £47bn in the first wave of the pandemic.

It’s still the second highest April borrowing since monthly records began in 1993, due to the ongoing healthcare costs of fighting Covid-19 — such as NHS Test and Trace programme and the vaccine rollout — and schemes such as the furlough programme.

But, it’s actually less than the £39bn which the Office for Budget Responsibility had expected the UK to borrow last month, in its March forecasts.

UK public borrowing, 2021-2022

UK public borrowing, 2021-2022 Photograph: ONS

April’s borrowing takes the UK national debt up to £2.171tn — around 98.5% of GDP, the highest ratio since the 99.5% recorded in March 1962.

The UK national dent

The UK national dent Photograph: ONS

But…..the ONS has also revised down its estimate for borrowing in the last financial year. It now estimates public sector net borrowing (PSNB ex) in the financial year ending March 2021 was £300.3bn.

That’s £2.8bn less than estimated last month, but still a record total for a single year.

Fraser Munro

The £300.3 bn borrowed (PSNB ex) in 2020/21 was nearly double that in 2009/10 at the height of the financial crises. Borrowing makes up the shortfall between spending by the government and other public sector organisations and its income such as taxes.

May 25, 2021

That works out at 14.3% of the UK’s gross domestic product (GDP) – the highest since the second world war.

Fraser Munro

UK borrowing (PSNB ex) was 14.3 % of GDP in 2020/21, revised down by 0.2 percentage points from last month’s first estimate but still the highest borrowing to GDP ratio since the end of World War II (15.2% in 1945/46)

May 25, 2021

Britain’s borrowing costs are still low — 10-year gilts are trading at a yield, or annual interest rate, of around 0.8% this morning. And many economists argue that this debt will be manageable, if the economy returns to growth (pulling down the debt/GDP ratio).

The ONS estimates that central government receipts were £58bn last month, up £3.8bn compared with April 2020, while central government bodies spent £95.9bn, down £12.9bn on a year earlier.

Current expenditure (stripping out investment and depreciation of assets) came in at £83.9bn – some 15% less than a year ago.

On the spending side, the ONS says:

Central government departments spent £31.0 billion on goods and services in April 2021, including £16.8 billion on procurement and £12.8 billion in pay:

This cost includes the expenditure by the Department of Health and Social Care (DHSC), devolved administrations, and other departments in response to the coronavirus pandemic, including the NHS Test and Trace programme and the cost of vaccines.

Central government paid £7.5 billion in subsidies to businesses and households in April 2021, £5.9 billion less than in April 2020. These payments included the cost of the job furlough schemes.

In April the government spent £3.0 billion on the Coronavirus Job Retention Scheme (CJRS) and £2.5 billion on the Self Employment Income Support Scheme (SEISS).

More details and reaction to follow….

The agenda

  • 9am BST: Ifo survey of Germany’s business climate in May
  • 9.30am BST: ONS report on impacts of the coronavirus and EU exit on UK trade
  • 10.30am BST: BEIS Committee hearing on UK steel industry, with Kwasi Kwarteng, Secretary of State
  • 11am BST: CBI monthly survey of UK retailers (distributive trades)
  • 2pm BTS: US house price index for March
  • 3pm BST: US consumer confidence report for May


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