Britain’s Public Borrowing Exceeds The Peak of The Financial Crisis

Britain’s public borrowing increased again in August, reaching a new record high, driven by massive spending to combat the Coronavirus pandemic, with the budget deficit since the start of the current tax year surpassing its full-year peak during the global financial crisis.

The government has now borrowed 173.7 billion pounds ($ 221.8 billion) in the first five months of the fiscal year that begins in April, topping the record of 157.7 billion pounds in the 12 months ending in March 2010.

And those providing government budget forecasts warn that the deficit may reach 372 billion by the end of the tax year, which raises borrowing as a percentage of GDP to 18.9%, a level not recorded since World War II and far exceeding debt sustainability rates in the long run.

Finance Minister Rishi Sunak said on Thursday it was time to focus on restoring growth, not curtailing borrowing, but added that tough decisions would be needed in the longer term.

Despite this, Sunak has cut subsidies for those whose work remains vulnerable by the pandemic.

Borrowing in August alone jumped to 35.9 billion pounds, below analysts’ average forecast of $ 38 billion, while the July figure was revised down by 11 billion to 15.4 billion pounds.

Net public sector debt was 2.024 trillion pounds, or 101.9% of GDP, the highest as a percentage of the economy since the 1960-1960 fiscal year.