UK Government borrowed £19.1bn in February
UK Government borrowing hit a record-high in February as a result of the need to support the British economy during the pandemic.
In February the UK Government borrowed £19.1bn, the highest figure since 1993 when records began, as well being £17.6bn more than the same month a year ago.
However, the UK’s borrowing during February was not as high as some economists predicted.
The Office for National Statistics (ONS) said that borrowing was set to equal the Office for Budget Responsibility’s forecast of £355bn for 2020/21.
Looking ahead, borrowing could be even lower, as the UK’s finances appear to confirm that economic activity has held steady during the latest lockdown and could recover faster than the OBR’s expectations.
On Thursday the Bank of England (BoE) upgraded its outlook for the UK economy, largely thanks to the vaccine roll-out. It also reaffirmed it is in no rush to reduce the levels of support it has been providing to buoy a recovery from the Covid-19 crisis.
Thomas Pugh, a UK economist at the consultancy Capital Economics, said that at £63.2bn, tax receipts were not that much below levels of a year ago, when the government collected £64.1bn in February 2020.
“But government expenditure remained extremely high at £72.6bn in February as the government spent £3.8bn on the furlough scheme in February. The February spending total was £15.0bn higher than in February 2020 and only slightly below spending in January 2021 of £75.2bn,” Pugh said.
“This leaves cumulative borrowing, with just one month to go until the end of the fiscal year, at £278.8bn. But the figures do not yet include an estimated £24bn of write-offs of government-backed loans.”
“In any case, we think that the fiscal forecasts further ahead are predicated on overly pessimistic forecasts for GDP growth. If we are right, borrowing may be lower than the OBR expects over the next few years, allowing the chancellor to cancel some of the proposed tax hikes before the 2024 general election.”
