The UK budget deficit hit its highest February level since records began in 1993 due to measures taken to stimulate the economy through the third lockdown.
Public sector net borrowing, excluding public sector banks, increased by GBP 17.6 billion from the previous year to GBP 19.1 billion in February, data from the Office for National Statistics revealed on Friday. This was the highest February borrowing since monthly records began in 1993.
In the financial year-to-February 2021, PSNB excluding banks, increased sharply by GBP 228.2 billion to GBP 278.8 billion. This was the highest public sector borrowing in any April to February period since 1993.
The Office for Budget Responsibility suggested that borrowing could increase to GBP 354.6 billion for the financial year ending March 2021.
The fiscal forecasts further ahead are predicated on overly pessimistic forecasts for GDP growth, Thomas Pugh, an economist at Capital Economics, said.
“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,” the economist added.
Further, data showed that public sector net debt excluding banks, rose by GBP 333.0 billion over the eleven months of the financial year-to-February, taking it to around 97.5 percent of gross domestic product, the highest since the early 1960s.
“We should look to return the public finances to a more sustainable path once the economy has recovered and at the budget I set out how we will begin to do just that,” Chancellor of the Exchequer Rishi Sunak said in a statement today.