Pandemic drives national debt to highest since 1960: Government set to borrow a record £400bn this year
- Figures emerged as Chancellor prepares to announce spending review next week
The staggering cost of the coronavirus pandemic has pushed the national debt to its highest level since 1960.
Government borrowing hit £214.9billion in the first seven months of the financial year, as the effects of increased spending were intensified by falling tax receipts.
The figures, from the Office for National Statistics, came ahead of Chancellor Rishi Sunak’s spending review next week.
Debt burden: Government borrowing hit £214.9bn in the first seven months of the financial year, as the effects of increased spending were intensified by falling tax receipts
Forecasts published alongside the review by the Office for Budget Responsibility are expected to show borrowing of close to £400billion this year – a record.
Sunak faces a tricky balancing act between supporting the economy and getting a grip on the country’s creaking public purse.
He is set to impose an immediate public sector pay freeze as he tries to wrestle the national debt down to a more manageable size.
But he is under pressure from his own party and Tory backers to avoid tax hikes which risk derailing the economic recovery.
The UK’s national debt has ballooned to £2.08 trillion and since May has been larger than the size of the economy.
The debt pile is worth 100.8 per cent of national income, a level not seen since the start of the 1960s.
Economists are predicting that Government borrowing for the full year to March 2021 could hit £400billion – more than double the peak following the global financial crisis in 2009-10.
Michael Hewson, chief market analyst at trading platform CMC Markets, said: ‘While it is entirely understandable for there to be a debate about these unprecedented levels of public borrowing, one has to question whether now is the right time to do it, given that we haven’t as yet defeated the virus, or even got a vaccine program in place yet.’