The UK government’s borrowing dropped sharply in October as companies and individuals required less economic support, with spending on the furlough scheme almost quartering.
Public sector net borrowing came in at £22.3bn last month, down sharply from a downwardly revised figure £28.6bn a month earlier, the Office for National Statistics (ONS) said. It was also well below what economists had been expecting.
However, the UK’s overall borrowing this year continued to smash records. The government had borrowed £215bn in the financial year to October, by far the biggest amount on record.
Britain’s debt-to-GDP ratio dropped to 100.8 per cent in October from 101.2 per cent in September as the economy grew. Nonetheless, it remained around the highest ratio since the 1960s.
The Treasury could also face an increase in borrowing in November, having extended the furlough scheme until March to support businesses during second lockdowns across the country.
Chancellor Rishi Sunak is set to unveil new spending plans covering one year for all government areas next week.
Sunak is reportedly set to put in place a public-sector pay freeze amid concerns about the ballooning budget deficit. NHS staff are set to be excluded, but the chancellor risks a row over government support to key workers.
Sunak says UK borrowing must be made ‘sustainable’
Responding to today’s borrowing figures, Sunak said: “We’ve provided over £200bn of support to protect the economy, lives and livelihoods from the significant and far reaching impacts of coronavirus.
“This is the responsible thing to do. But it’s also clear that over time it’s right we ensure the public finances are put on a sustainable path.”
October’s public borrowing figures were helped by an increase in tax receipts. They climbed to £39.7bn.
The government’s support to the economy also fell as fewer companies asked for money through the furlough scheme. Spending on furlough almost quartered to £1.3bn in October.
A survey yesterday showed that around nine per cent of UK workers were furloughed in the two weeks to the end of November. The Treasury can expect this figure to increase with the England-wide month-long lockdown put in place from 5 November.
Britain’s overall pile of debt hit a record £2.06 trillion in October, the ONS said. It has grown by £259.2bn this year – a record increase.