The UK’s Office for National Statistics (ONS) said on Wednesday the UK Government’s borrowing reached £208.5 billion in the first six months of this financial year, £174.5 billion more than in the same period last year.
The Office for Budget Responsibility (OBR) said the UK Debt Management Office (DMO) sold £306 billion in gilts to the end of September — 79% of the £385 billion in debt it plans to sell between April and November.
However, the OBR said the Bank of England, the UK’s central bank, bought £268 billion of the gilts.
The Bank of England is wholly-owned by the UK government and the capital of the central bank is held by the Treasury Solicitor on behalf of HM Treasury.
Although owned by HM Treasury, the Bank of England says it carries out its responsibilities independently and is “free from day-to-day political influence.”
The £208.5 billion was the UK’s highest borrowing in any April to September period since records began.
The ONS said the UK’s public debt rose by £259.2 billion in the first six months of the financial year to reach £2.059 trillion at the end of September 2020, around 103.5% of gross domestic product (GDP) — the highest debt to GDP ratio since the financial year ending 1960.
The OBR has said UK borrowing in the current financial year (April 2020 to March 2021) could reach £372.2 billion, around seven times the amount borrowed in the financial year ending 2020.
The OBR said UK central government spending so far in 2020-21 is 33% higher than a year earlier, reflecting the cost of the coronavirus job retention and self-employment income support schemes, plus additional grants to local authorities and higher public services spending.
The OBR said HMRC cash receipts over the first half of 2020-21 were 21% lower than a year earlier, with VAT accounting for the bulk of the fall thanks to the Government’s rate cuts and deferral scheme (which ended on 30 June) together with lower consumer spending.
Income tax and NICs receipts were also down on last year, but fell by less than assumed in the OBR’s “central scenario.”
The OBR added: “Year-to-date borrowing is still lower than assumed in the central scenario from our fiscal sustainability report, as both GDP and tax receipts have fared better than assumed.
“But with a resurgence in virus cases and the Chancellor announcing new support measures, prospects for the rest of the year remain highly uncertain.”