UK annual borrowing hits post-war high of £303bn - ONS
The UK's annual borrowing hit a high not seen since the aftermath of the second world war as Covid-19 forced the state to spend to prevent an economic catastrophe, official figures showed.
The Treasury borrowed £303.1bn in the year to the end of March, the Office for National Statistics said in its first estimates for the public finances. The highest nominal borrowing since 1947 exploded as Chancellor Rishi Sunak spent to keep workers in jobs and support businesses while trying to contain the pandemic.
The figure was £246.1bn more than the previous year and was equal to 14.5% of national output. The last time borrowing as a share of GDP was higher was in 1946 when the figure was 15.2%. The government borrowed £28bn in March - the highest figure for that month on record and £21bn more than a year earlier.
Borrowing was £24.3bn less than £327.4bn forecast by the Office for Budget Responsibility, the government's fiscal watchdog, in March. The public finances were also hit by a £34.2bn drop in tax collected with big declines in VAT, business rates and fuel duty.
The borrowing figure is likely to rise as the ONS builds in write-offs from government-backed loans issued during the pandemic. But some economists think output will bounce back quickly from the crisis, helping to mend the gap in the public finances.
Surveys released on Friday showed services and manufacturing activity accelerating as the economy began to reopen from a three-month lockdown and with vaccines increasing confidence in the recovery.
Ruth Gregory, Capital Economics's senior UK economist, said: "The further rise in public borrowing in March rounded out the worst year for the public finances since 1947. But borrowing was £24.3bn lower than the Office for Budget Responsibility predicted just a month ago. If we are right in thinking the economic recovery will be faster and fuller than the OBR anticipates, borrowing will probably also fall more quickly than the OBR expects further ahead."