Government borrowing soars to record £62bn in April to cope with coronavirus

May 22, 2020 9:27:58 AM

Government borrowing soars to record £62bn in April to cope with coronavirus

Government borrowing surged to £62.1 billion to April – the highest figure for any month on record – after heavy spending in the face of coronavirus, according to new figures.

The Office for National Statistics (ONS) said public sector borrowing – excluding banks owned by the state – was £51.1 billion higher than the same month last year.

The figure is significantly higher than analysts had predicted, with a consensus of economists predicting £30.7 billion for the month.

(PA Graphics)
(PA Graphics)

However, it is slightly lower than the £66.6 billion estimate made by the Office for Budget Responsibility (OBR) last month.

It comes after the Chancellor stepped up financial support for businesses and employees after vast areas of the economy were forced to halt due to the coronavirus lockdown.

A fall in tax receipts also significantly contributed to the rise in borrowing, with central government receipts sliding by 26.5% for the month compared to April 2019.

This was driven by a combination of contracting economic activity, rising unemployment and weaker earnings, and tax breaks given to companies in response to the lockdown.

The ONS also cautioned that its first estimate of borrowing April could be significantly revised as the full impact of the outbreak becomes clearer.

The Treasury (Aaron Chown/PA)

Meanwhile, borrowing by the state in March 2020 has been revised up by £11.7 billion to £14.7 billion by the ONS.

It said this was driven by a reduction in previous estimates of tax receipts and National Insurance contributions.

As a result of the jump in borrowing, public sector debt rose to £1,887.6 billion at the end of April – £118.4 billion higher than April 2019.

The ONS said that the Government borrowed £62.7 billion over the 12 months to the end of March, representing a £22.5 billion rise on the previous year.

Last month, it jumped £9.3 billion to a higher-than-forecast £48.7 billion in the financial year to March 31.

Charlie McCurdy, a researcher at the Resolution Foundation, said: “The latest borrowing figures offer a stark illustration of the fiscal costs of coronavirus and the lockdown measures required to contain it, with the Government borrowing as much last month as it during the whole of last year.

“But while there is significant pressure on the public finances, there are no signs that the Government is struggling to find the cash.

“Record low interest rates mean the UK’s higher debt burden should remain more than manageable.”