Extract from Redwood Financial’s Economic Review March 2021
The latest public sector finance statistics show borrowing remains at record levels as the government continues to spend vast sums supporting the economy through the pandemic.
Figures released by ONS revealed that UK public sector net borrowing (the gap between the country’s overall income and expenditure) totalled £19.1bn in February. This was £17.6bn more than the comparable month last year and the largest amount borrowed in any February since records began in 1993. Total public sector debt now stands at £2.13trn which equates to 97.5% of the UK’s annual economic output.
Despite the mounting level of debt, economists have supported the need for greater government spending in the midst of the current economic contraction. The Chancellor once again defended his actions, saying the government’s support package was “the fiscally responsible thing to do and the best way to support the public finances in the medium term.”
The latest data also offered some positive news, with February’s level of borrowing coming in below analysts’ expectations and ONS announcing a downward revision to January’s figure. As a result, total borrowing in the current fiscal year is now expected to slightly undershoot the Office for Budget Responsibility’s most recent mammoth forecast.