The coronavirus pandemic forced the UK government to borrow £303.1 billion in the year ending in March, an increase of £246.1 billion on the previous year.
The debt figure was revealed as the UK’s Office for National Statistics (ONS) published its first provisional estimates of UK public sector finances for the latest full financial year.
“Public sector net borrowing … in the FYE March 2021 is estimated to have been £303.1 billion, £246.1 billion more than in the FYE March 2020 and the highest nominal public sector borrowing in any financial year since records began in the FYE March 1947,” said the ONS.
“Expressed as a ratio of gross domestic product (GDP), public sector net borrowing … in the FYE March 2021 was 14.5%, the highest such ratio since the end of World War Two, when in FYE March 1946 it was 15.2% …”
Isabel Stockton, research economist at the Institute for Fiscal Studies (IFS), said: “Today’s figures confirm that government borrowing reached a peacetime record in the financial year that ended last month, with an initial estimate of borrowing of £303 billion, or almost 15%% of national income.
“The increase on the pre-pandemic forecast is unprecedented and highlights the extraordinary impact of the pandemic on government revenues and spending.
“We can also expect this estimate to be revised up, perhaps quite significantly, as the non-repayment of government backed loans by businesses is incorporated.
“This has increased national debt to £2,142 billion or almost 100% of national income.
“With the lowest interest rates in history this is currently perfectly manageable, but rising interest rates could create difficulties for the government finances.
“This is one of many uncertainties which the Chancellor will have to manage over the coming years.
“While the most recent Budget plans suggest a return to the Government borrowing only to pay for investment spending by 2025–26 this depends on a swift recovery, big tax rises and very tight spending.
“There is a good chance that at least one of these will not happen.”
The IFS added: “Borrowing is estimated to have reached £303 billion, or 14.5% of national income.
“This is £52 billion less than the £355 billion forecast by the Office for Budget Responsibility at the Budget in early March.
“However, it is a staggering £248 billion, or 12.1% of national income, higher than forecast just before the financial year began – and more to the point, just prior to the economic impact of Covid-19 started to be felt in the UK – in March 202 …”