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UK’s £34.1bn December borrowing exceeds forecasts

(Sharecast News) – The UK borrowed £34.1bn in December, exceeding forecasts and recording the highest level for that month on record as Covid-19 forced the government to issue more debt, official figures showed.
Public sector net borrowing was £28.2bn more than a year earlier, the third-highest month on record and the highest December figure since records began in 1993, the Office for National Statistics said. Economists had on average expected borrowing of £32bn.

Central government current spending was £86.2bn in December, up £26.1bn from a year earlier. The figure includes £10bn on Covid-19 job support. Tax receipts fell £1.4bn to £43.6bn as VAT and business rate receipts fell because of the Covid-19 crisis.

Government borrowing in the nine months to the end of December was £270.8bn, up £212.7bn from a year earlier and the highest figure for that period on record. Since December the UK has entered a new strict Covid-19 lockdown to stem a rising tide of infections with restrictions likely to last many weeks.

Chancellor Rishi Sunak is preparing his budget, due in early March. He is under pressure to maintain support for the economy and households during the crisis but he has told Tory MPs he wants to deal with the deficit as soon as possible. Many economists argue reducing support or increasing taxes at this stage of the crisis would be damaging in the long run.

Charlie McCurdy, a researcher at the Resolution Foundation thinktank, said: “This level of spending may be eye-wateringly large but it is absolutely necessary both to tackle the virus and protect families and firms from the crisis.”

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