LONDON (Bloomberg) - UK government borrowing climbed to a record 214.9 billion pounds in the first seven months of the fiscal year, underscoring the tough choices facing Chancellor of the Exchequer Rishi Sunak as he prepares for a major announcement on spending next week.
Office for National Statistics figures Friday showed the deficit in October alone totaled 22.3 billion pounds, leaving Britain on course for a shortfall approaching 400 billion pounds for 2020-21 as a whole and debt above 100% of GDP for the first time since the early 1960s. There was better news on retail sales, which rose for a sixth straight month.
The scale of the damage inflicted by the pandemic will be laid bare on Nov. 25, when Sunak unveils the cash each department will get to fund public services and investment in the coming year. While the spending review is expected to deliver on key commitments, millions of public-sector workers are facing a renewed pay squeeze as the government tries to contain borrowing.
The plans will be underpinned by new forecasts from the Office for Budget Responsibility, which is expected to echo the Bank of England and private-sector analysts by predicting the sharpest economic contraction since the Great Frost of 1709 -- and only a gradual recovery to pre-pandemic levels.
The Bank of England expects the economy to contract by 11% this year
Source: Bank of England, Office for National Statistics
At almost a fifth of the economy, the deficit is set to be the largest in British peacetime -- a staggering deterioration from March, when the OBR was expecting just 55 billion pounds, or around 2.5% of GDP.