UK government borrowing between April and June has jumped to £127.9bn, the highest amount since records began in 1993.
In order to combat the effects of the Coronavirus pandemic, borrowing in the first quarter of the 2020-21 financial year was more than double than the entire previous year.
Last week, finance minister Rishi Sunak set out further spending plans of £30bn, to encourage employers to continue hiring workers after the furlough scheme is set to end in October.
“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,” he said.
Due to the high levels of government borrowing, there is a possibility that Sunak could use the Autumn budget to launch new austerity measures of raise taxes to combat the unsustainable trajactory of UK public finances.
Resistant to comment on future tax changes, Sunak did say last week: “Fundamentally we don’t tax our way into prosperity. We want people to share more of their own money. But we also have a lot of demands on public services, and they need to be funded.”
The Centre for Macroeconomics (CfM) has carried out research with leading economists and found that there was a little concern of future deficit.
Gerard Lyons, a senior fellow at the thinktank Policy Exchange, said new rounds of austerity would be a mistake. He said: “The idea should be to reduce the deficit over time through a pro-growth strategy. A rising budget deficit acts as a shock absorber during this crisis and we should be grateful for it.”
