Public sector borrowing surged to a record high in the past year after a huge rise in spending and tax cuts amid the pandemic.
The UK Government borrowed £303.1bn in the last year, an increase of £246bn on the previous year, according to figures from the Office of National Statistics (ONS).
As a ratio of GDP, borrowing was up 14.5 per cent, the highest ratio since the end of World War Two when it was 15.2 per cent.
While the headline figures are staggering, it is £24.3bn less than the £327.4bn the Office for Budget Responsibility anticipated in its economic and fiscal outlook.
“The rise in borrowing has so far been a spending story. We expect to see this reverse this year, with receipts getting a £12.5bn a year hit from the corporation tax super-deduction, and the ending of the furlough scheme feeding through to lower income tax receipts,” he said.
Public sector net debt is £2,141.7bn to the end of March, around 97.7 per cent of GDP, maintaining a level not seen since the early 1960s.
ONS figures show central government tax receipts are estimated to have been £523.6bn in the year to March, which is £34.2bn lower than last year with notable falls in taxes in VAT, business rates and fuel duty.
“Improvement in the state of public finances could be swifter this time. It took five years following the last financial crisis to halve the deficit from its peak. In this crisis we may already see that happen next year, once the support schemes come to an end, although a full return to pre-Covid state of finances could take longer,” Stelmach said.