UK borrowing soars in August as Covid costs mount

The UK government borrowed £35.9bn in August as tackling the economic fallout of pandemic took its toll on the public finances, official figures show.

The figure – the difference between spending and tax income – was £30.5bn more than it borrowed in August last year.

The increase meant that the borrowing figure hit its highest amount for August since records began in 1993.

Borrowing between April and August totalled £173.7bn – also a record.

UK debt passed £2tn for the first time in history in July as the government spent billions on introducing measures designed to protect the economy against the fallout caused by the coronavirus crisis.

In August, debt hit £2.024tn, £249.5bn more than the same time in 2019, according to the Office for National Statistics.

That figure now exceeds the size of the UK economy, the highest level of debt seen since the 1960s.

Andrew Wishart, UK economist at Capital Economics, said that rising borrowing figures were down to the government absorbing “much of the cost of the Covid-19 crisis”.

The government has been forced to cover a wide range coronavirus-related costs – from the furlough scheme and bailouts for rail firms to business rates holidays and VAT cuts for hospitality and tourism.

But “the big picture is that fiscal support will fade over the autumn causing many more job losses to be realised”, Mr Wishart added.

Friday’s figures from the ONS showed that while billions have been pumped into propping up the economy, tax receipts have dropped sharply.

The amount collected by central government in taxes dropped to £37.3bn in August, which is £7.5bn less than a year before.

The amount of VAT, corporation tax and income tax collected fell “considerably”, the ONS said.

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