UK debt rises in June amid pandemic
The UK government borrowed £35.5bn in June, roughly five times more than the same month last year, as the global pandemic continues to weigh on public finances.
The figure took total government debt to a record £1.98 trillion. But, the monthly borrowing figure was in line with expectations.
The re-opening of non-essential shops and other businesses in June saw a drop in furlough scheme spending and a rise in tax take.
Nevertheless, the June borrowing figure was still the third-highest since records began in 1993.
The ONS said the borrowing estimates are currently “subject to greater than usual uncertainty.”
It has revised down May’s borrowing figure by £9.8bn to £45.5bn, mainly because tax receipts and National Insurance contributions were higher than estimated.
A Plan For Jobs 👇https://t.co/vLIPpEGEXI
— Rishi Sunak (@RishiSunak) July 8, 2020
Limit to how much the government can borrow
When businesses reopened in June some were able to wean themselves off state support. But it still meant the deficit for the first quarter of the financial year was more than twice for the last year as a whole.
Rishi Sunak’s Plan for Jobs – the package intended to support workers and businesses as the furlough schemes are wound down – probably won’t be enough to stop mass layoffs. Joblessness could top four million and many are expecting help from the Autumn budget,
This year’s deficit is likely to top £300bn. There is a limit to how much the government can and will borrow cheaply to plug that.
Chancellor Rishi Sunak said: “It’s clear that coronavirus has had a significant impact on our public finances, but we know without our response things would have been far worse.
“The best approach to ensure our public finances are sustainable in the medium-term is to minimise the economic scarring caused by the pandemic.
“I am also clear that, over the medium-term, we must, and we will, put our public finances back on a sustainable footing.”
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