British government borrowing went to a record 128 billion pounds in the first three months of the 2020/21 financial year, when Covid-19 lockdown measures were tightest, more than double the entire previous year’s borrowing. Most economists think British government borrowing this year will be its largest since World War Two relative to the size of the economy.
Borrowing in June, excluding state-owned banks, was 35.5 billion pounds, the government statistics office said. That was five times more than a year earlier though below economists’ average forecast of 41.5 billion pounds, following a big downward revision for May. April, May and June made up the three months of highest borrowing in Britain’s history, even though spending on job support was lower than first estimated, and tax revenues higher, the Office for National Statistics said.
Following the figures, finance minister Rishi Sunak restated his intention to put the public finances on a more sustainable footing over the medium term, and launched a much-delayed long-term review into government spending. But analysts doubt the economy will be strong enough for him to start tightening fiscal policy later this year.
“If (interest) rates remain as low as they are currently - and it is likely the Bank of England will make sure they do - the chancellor may just decide to push out those difficult decisions a little longer,” HSBC economist Elizabeth Martins said.
