The UK authorities was pressured to borrow a peacetime report of £303bn to fight Covid-19 within the first full monetary yr of the disaster however the complete was decrease than initially feared, official figures have proven.
Regardless of a £28bn hole between state spending and tax receipts in March, the Office for National Statistics (ONS) mentioned the deficit for the 2020-21 yr was £24bn lower than the £327bn pencilled in on the time of the budget by the Workplace for Price range Accountability (OBR).
As a proportion of nationwide output, borrowing within the yr between April 2020 and March 2021 stood at 14.5% – the very best for the reason that monetary yr ending in March 1946, a interval that coated the ultimate few months of the second world conflict.
Greater authorities spending was accountable for the majority of the £246bn improve in borrowing in contrast with the earlier yr, though the ONS mentioned tax receipts had additionally fallen. Authorities debt – borrowing that has amassed over time – stood at £2.14tn on the finish of March, nearly 98% of nationwide earnings.
The ONS’s preliminary borrowing knowledge will finally be revised to take account of write-offs on loans to corporations affected by the financial disruption attributable to the pandemic. In response to OBR estimates, these are heading in the right direction to be simply over £27bn.
Borrowing in March alone stood at £28bn in contrast with £7bn in the identical month a yr in the past. The ONS mentioned it was the very best March determine since month-to-month information started in 1993.
Samuel Tombs, an economist at Pantheon Macro, mentioned central authorities tax receipts for the 2020-21 yr have been, at £722.8bn, barely increased than the OBR’s £718.6bn forecast, whereas central authorities spending was £11bn decrease at £1,033bn.
“Authorities departments seem to have underspent relative to their allotted budgets to a fair larger extent than regular, particularly on public well being,” he mentioned.