UK government borrowing for the first four months of its fiscal year stood at £78 billion at the end of July — the second-highest financial year-to-July borrowing since monthly records began in 1993, but £61.6 billion less than in the same period last year at the height of pandemic spending.

The UK’s Office for National Statistics (ONS) said on Friday the UK’s public sector net debt was £2.216 trillion at the end of July 2021 — an increase of £222.3 billion on the same stage of last year — or around 98.8% of GDP, the highest ratio since the 99.5% recorded in March 1962.

Official UK government forecasts suggest that UK borrowing may reach £233.9 billion by the end of the financial year ending (FYE) March 2022, £64.1 billion less than that borrowed in the FYE March 2021.

The ONS said UK public sector net borrowing was estimated to have been £10.4 billion in the month of July 2021 — the second-highest July borrowing since monthly records began in 1993, but £10.1 billion less than in July 2020.

UK central government receipts in July 2021 were estimated to have been £70 billion, £9.5 billion more than in July 2020, while central government bodies spent £79.8 billion in July 2021, £2.9 billion less than in July 2020.

The ONS said there were £1.946 trillion of UK central government gilts (bonds) in circulation at the end of July 2021, including those held by the Asset Purchase Facility (APF) Fund of the UK central bank, the Bank of England.

“The estimated impact of the APF’s gilt holdings on debt currently stands at £101.7 billion, representing the difference between the value of the reserves created to purchase gilts (or market value of the gilts) and the £709.6 billion face (or redemption) value of the gilts purchased,” said the ONS.

“The total corporate bond holdings of the APF at the end of July 2021 stood at £19.7 billion, adding an equivalent amount to the level of debt.”

The UK central bank aims to raise its main holding of UK government bonds to £875 billion by the end of this year, and is currently buying UK government debt at a rate of £3.4 billion a week, Reuters reported.

The ONS added: “The Bank of England’s (BoE) contribution to debt is largely a result of its quantitative easing activities through the BoE Asset Purchase Facility (APF) Fund and Term Funding Schemes (TFS).

“If we were to remove the temporary debt impact of these schemes along with the other transactions relating to the normal operations of the BoE, public sector net debt excluding public sector banks (PSND ex) at the end of July 2021 would reduce by £225.3 billion (or 10.1 percentage points of GDP) to £1,990.7 billion (or 88.7% of GDP).”

UK finance minister Rishi Sunak said: “Our recovery from the pandemic is well under way, boosted by the huge amount of support Government has provided.

“But the last 18 months have had a huge impact on our economy and public finances, and many risks remain.

“We’re committed to keeping the public finances on a sustainable footing, which is why, at the Budget in March, I set out the steps we are taking to keep debt under control in the years to come.”

The Office for Budget Responsibility (OBR) said the ONS statement reflects “the much stronger performance of income tax and National Insurance Contributions, VAT and corporation tax.”

The OBR said the ONS statement “reflects both stronger-than-expected receipts (thanks largely to a 200 faster-than-expected economic recovery) and lower-than-expected spending (due to the faster-than expected unwinding of covid-related government support) …”

Isabel Stockton, research economist at the Institute for Fiscal Studies said: “On a 12-month rolling basis, borrowing has been falling since April, and falling faster than expected at the Budget.

“But at 10.8% of national income, today’s figures show that borrowing over the year to July was still high compared to the long-run pre-COVID average of 2.5%.

“Even if, as recent revisions to economic forecasts suggest, some of this improvement persists the coming Spending Review will still require some very difficult decisions and, most likely, more generous spending totals than currently pencilled in by the Chancellor given the myriad pressures on public services and the benefit system following the pandemic.”