Government borrowing soared in October as the UK continued to support the economy during the pandemic.
The Office for National Statistics (ONS) said borrowing hit £22.3bn last month, the highest October figure since monthly records began in 1993.
It underlines that the pandemic is having a “substantial effect” on the public finances, the ONS said.
But the figure – the difference between spending and tax income – was not as high as some economists had forecast.
Since the beginning of the financial year in April, government borrowing has reached £214.9bn, £169.1bn more than a year ago.
The independent Office for Budget Responsibility (OBR) has estimated it could reach £372.2bn by the end of the financial year in March.
Where does the government borrow?
The government borrows in the financial markets, by selling bonds.
A bond is a promise to make payments to whoever holds it on certain dates. There is a large payment on the final date – in effect, the repayment.
The buyers of these bonds, or “gilts”, are mainly financial institutions, like pension funds, investment funds, banks and insurance companies. Private savers also buy some.
The increase in borrowing has led to sharp increase in the national debt, which now stands at £2.08 trillion, larger than the size of the economy.
The UK’s overall debt has now reached 100.8% of gross domestic product (GDP) – a level not seen since the early 1960s.
The Office for Budget Responsibility (OBR) will publish its latest forecast next week, when Chancellor Rishi Sunak, announces his Spending Review.
Millions of public sector workers face a pay freeze as part of that review, as the chancellor makes the case for pay restraint to reflect a fall in private sector earnings this year.
The Treasury is trying to bolster public finances after the huge rise in spending to fight coronavirus.
Source: bbc.com
