UK government borrowing for the first six months of its fiscal year reached £108.1 billion by the end of September 2021, the second highest year-to-September borrowing since monthly records began in 1993.
This total was £101.2 billion less than in the same period last year during the pandemic.
That’s according to the latest data from the UK’s Office for National Statistics (ONS).
UK public sector net debt excluding public sector banks was £2.218 trillion at the end of September 2021 or around 95.5% of gross domestic product (GDP) — maintaining a level not seen since the early sixties.
Public sector net borrowing excluding public sector banks was estimated to have been £21.8 billion in September 2021 alone — the second-highest September borrowing since monthly records began in 1993.
This was £7 billion less than in September 2020– but still £13.7 billion more than in September 2019.
Institute for Fiscal Studies deputy director Carl Emmerson said that while the lower than expected borrowing in September “will doubtless please the chancellor,” what matters more “is the extent to which any improvement in borrowing persists beyond this year.”
UK central government receipts in September 2021 were estimated to have been £62.3 billion, £6.2 billion more than in September 2020, while central government bodies spent £84.1 billion in September 2021, £1.3 billion less than in September 2020.
AJ Bell financial analyst Danni Hewson said: “There’s no doubt things are improving. Borrowing has been falling thanks to an increase in tax receipts as country gets back to work.
“The problem is there’s still a big gap between income and expenditure and every month is just adding a little more to that debt mountain which now stands at an eyewatering 95.5% of GDP.
“The chancellor knows he has to get borrowing under control but he’s also hyper aware that simply turning off the taps could leave the country floundering in a muddy puddle.
“There’s been a lot of talk about how these kinds of figures haven’t been seen since war time but make no mistake COVID was and is a mighty foe, and discussions over the last few days about infection levels serve as a reminder that this particular war might not have reached its denouement.
“When the first lockdown was announced the government opened the greenhouse where the magic money tree is carefully tended and picked off over three hundred billion green leaves, the equivalent of almost 15% of UK GDP.
“The tree is looking a little battered and in an ideal world the door would now be closed and time allowed to work its magic so the next time the economy suffered a massive shock those lovely leaves were full and verdant, but sometimes an ideal isn’t attainable.
“There’s also the little issue of paying the gardener – the interest on all that debt is a concern when the odds of a rate rise this year have just been shortened and inflation is still simmering.
“But jobs have been protected.
“The furlough scheme is now over, and the September bill was 63 percent lower than that of the previous year.
“Shuttered shops are leading to a near doubling of business rate payments and drivers are filling up despite shortages giving a small but welcome boost to fuel duty.
“The Treasury will have crunched its numbers already; it will be hyper aware that this budget is one of the most important a chancellor has ever had to give.
“Fiscal responsibility tempered by a responsibility to a country still wobbly on its feet and with half an eye on what might happen if plan A doesn’t cut it.”