UK Borrowing Hits New Record During CCP Virus Pandemic

UK Borrowing Hits New Record During CCP Virus Pandemic
A general view shows the Bank of England and the City of London financial district, amid the outbreak of the CCP virus, in London, on Nov. 5, 2020. (John Sibley/File Photo/Reuters)
Alexander Zhang

The British government borrowed £215 billion ($285 billion) in the first seven months of the financial year, the highest since records began in 1993, according to official statistics released on Friday.

The COVID-19 pandemic, which was caused by the CCP (Chinese Communist Party) virus, has had a substantial impact on public sector borrowing, the Office for National Statistics (ONS) said in its latest report.

Central government tax and national insurance receipts in the seven months to October fell by £38.3 billion (or 9.7 percent) compared with the same period in 2019.

At the same time, government support for individuals and businesses during the pandemic contributed to an increase of £123.5 billion (or 28.5 percent) in central government day-to-day (or current) spending.

Public sector net borrowing from April to October 2020 is estimated to have been £214.9 billion, "£169.1 billion more than in the same period last year and the highest public sector borrowing in any April to October period since records began in 1993," the ONS revealed.

In October, public sector net borrowing is estimated to have been £22.3 billion, £10.8 billion more than in the same month last year. This is the highest October borrowing since records began, the report said.

At the same time, tax revenues have declined. Central government tax receipts are estimated to have been £39.7 billion in October 2020, £2.7 billion less than in October 2019.

Government expenditure has risen as a result of the pandemic. Central government bodies are estimated to have spent £71.3 billion on day-to-day activities in October 2020, £6.4 billion more than in October 2019.

This growth includes £1.3 billion in the Coronavirus Job Retention Scheme (CJRS) and £0.3 billion in Self Employment Income Support Scheme (SEISS) payments.

The extra funding required to support government CCP virus support schemes, such as the furlough scheme, combined with reduced tax revenues and a fall in gross domestic product (GDP) have all helped push public sector net debt to a new high.

The UK’s public sector net debt (excluding public sector banks) at the end of October 2020 was equivalent to 100.8 percent of GDP, a ratio last seen in the early 1960s.

Chancellor Rishi Sunak said the government’s support for the pandemic-hit economy has been necessary.

"We’ve provided over 200 billion (pounds) of support to protect the economy, lives and livelihoods from the significant and far-reaching impacts of coronavirus," he said on Friday.

"This is the responsible thing to do, but it’s also clear that over time it’s right we ensure the public finances are put on a sustainable path."

Reuters contributed to this report.