UK Budget Deficit Surges On Covid-19 Support Schemes
The UK budget deficit surged to the third highest level on
record in December as the government stepped up measures to support
households and businesses amid the pandemic, official data revealed
Public sector net borrowing, excluding public sector banks,
totaled GBP 34.1 billion in December, which was GBP 28.2 billion
more than in the same period last year, the Office for National
This was both the highest December borrowing and the
third-highest borrowing in any month since monthly records began in
Government incurred GBP 10 billion additional expenditure on
coronavirus job support schemes. Altogether, government spent GBP
86.2 billion on day-to-day activities in December.
Meanwhile, central government tax receipts fell GBP 1.4 billion
to GBP 43.6 billion in December.
December's jump in borrowing is likely to set the tone for the
next few months as the third Covid-19 lockdown keeps many
businesses closed and will only increase talk of how to pay for the
crisis, Thomas Pugh, an economist at Capital Economics, said.
However, the economist said Chancellor Rishi Sunak should resist
the urge to try to reduce the budget deficit at the next Budget on
March 3, and instead focus on continuing to support those areas of
the economy that need it.
During April to December period, PSNB increased by GBP 212.7
billion from the same period last year to GBP 270.8 billion, the
highest deficit in any April to December period since 1993.
The independent Office for Budget Responsibility had earlier
estimated a deficit of GBP 393.5 billion for the financial year
ending March 2021.
The ONS said extra funding required to support government
coronavirus support schemes combined with reduced cash receipts and
a fall in GDP have all helped push public sector net debt as a
ratio of GDP to levels last seen in the early 1960s.
In the first nine months of the financial year, public sector
net debt reached GBP 2,131.7 billion, or around 99.4 percent of