Introduction: Another month of record borrowing
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Britain has racked up another month of unprecedented borrowing, as the economic cost of Covid-19 continues to mount.
Figures just released show that public sector net borrowing hit £36.1bn in September 2020, a record level for the month, and more than economists expected.
That’s £28.4bn more than in September 2019, and the third-highest borrowing in any month since records began in 1993 — following April and May this year.
It means that since April (the start of the financial year) the UK has borrowed around £208.5bn to cover the cost of protecting the UK economy from the pandemic.
That’s £174.5bn more than a year ago — and the highest borrowing in any April to September period since records began in 1993. Every month since April has seen record borrowing.
September’s borrowing has pushed the UK national debt up to £2,059.7, or around 103.5% of GDP — the highest debt to GDP ratio since 1960.
This includes billions spend on PPE equipment, the job retention scheme that saw millions of workers paid by the government, and lost tax receipts as the economy locked down.
The ONS explains:
- Central government tax receipts are estimated to have been £37.7bn in September 2020), £6.0bn less than in September 2019, with large falls in Value Added Tax (VAT), Business Rates and Corporation Tax receipts.
- Central government bodies are estimated to have spent £77.8bn on day-to-day activities (current expenditure) in September 2020, £18.1bn more than in September 2019; this includes £4.9bn in Coronavirus Job Retention Scheme (CJRS) and £1.0bn in Self Employment Income Support Scheme (SEISS) payments.
Fortunately, Britain can borrow cheaper than ever before.
Ten-year UK gilts trading at an interest rate below 0.2%, showing solid demand for UK debt, and meaning that the cost of servicing the Covid-19 borrowing will be historically low.
More details and reaction to follow…
- 7am BST: UK inflation data for September
- 7am BST: UK public finances for September
- 12pm BST: US weekly mortgage approvals data
- 1.10pm BST: Bank of England deputy governor Sir Dave Ramsden speaks on “UK Monetary Policy: Issues and Outlook”