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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.
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.
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.
That works out at 14.3% of the UK’s gross domestic product (GDP) – the highest since the second world war.
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.
More details and reaction to follow….
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