UK borrowing jumps in September as Covid support continues

UK borrowing jumps in September as Covid support continues

UK government borrowing hit £36.1bn in September as the UK continued heavy spending to support the economy during the coronavirus pandemic.

The figure was £28.4bn more than last year, and the third-highest in any month since records began in 1993, the Office for National Statistics said.

The ONS said the pandemic has had an impact on public sector borrowing “unprecedented in peacetime”.

Extra money was needed to pay furlough wages and support businesses.

At the same time, tax income fell. Lower spending and corporate profits meant the government received less in VAT and corporation tax.

The national debt is now 103.5% of the size of the UK’s economy, as measured in gross domestic product (GDP).

The last time debt as a proportion of the economy was so large was 1960.

Under normal circumstances, such a high ratio may put off lenders to the UK. However, the government can currently borrow money for 10 years at 0.19%.

Inflation figures also out on Wednesday showed inflation climbed to 0.5%

Low inflation and low borrowing rates “give the Bank of England and the Chancellor the green light to do more to support the economy,” Paul Dales, chief UK economist at Capital Economics said.

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