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UK Budget Deficit Widens To Record High

ukpublicfinancedata july19 25sep20 lt

The UK budget deficit widened to the highest on record in the financial year-to-date period reflecting the impact of the coronavirus pandemic on the public finances, with the furlough schemes alone adding GBP 56.0 billion to borrowing as subsidies paid by the central government.

Data from the Office for National Statistics showed that during April to August, public sector net borrowing was estimated to have been GBP 173.7 billion, which was GBP 146.9 billion more than in the same period last year and the highest borrowing in any April to August period since records began in 1993.

In August alone, public sector net borrowing excluding public sector banks, increased by GBP 30.5 billion from last year to GBP 35.9 billion in August.

This was slightly above economists' forecast of GBP 35.05 billion and the highest borrowing in any month since records began in 1993.

In August, receipts fell 14.3 percent annually, while expenditure including job furlough schemes and social benefits surged 34.7 percent.

Public sector net debt excluding public sector banks at the end of August 2020 was GBP 2,023.9 billion or around 101.9 percent of gross domestic product.

The extra funding required to support the government's coronavirus relief schemes combined with reduced cash receipts and a fall in gross domestic product have pushed the public sector net debt, the ONS said.

The Chancellor Rishi Sunak on Thursday unveiled a new Job Support Scheme and measures to support businesses over months ahead.

With the recovery stuttering and no sign of concern in the gilt market, the government is right to have refocussed on supporting the economy rather than raising taxes, Andrew Wishart, an economist at Capital Economics, said.

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