UK borrowing hits highest November level on record

PA Media

Government borrowing soared in November as the UK continued to support the economy during the pandemic.

The Office for National Statistics (ONS) said borrowing hit £31.6bn last month, the highest November figure on record.

It was also the third-highest borrowing in any month since monthly records began in 1993.

Since the beginning of the financial year, borrowing has reached £240.9bn, £188.6bn more than a year ago.

The independent Office for Budget Responsibility (OBR) has estimated it could reach £372.2bn by the end of the financial year in March.

Where does the government borrow?

The government borrows in the financial markets, by selling bonds.

A bond is a promise to make payments to whoever holds it on certain dates. There is a large payment on the final date - in effect, the repayment.

The buyers of these bonds, or "gilts", are mainly financial institutions, like pension funds, investment funds, banks and insurance companies. Private savers also buy some.

You can read more here about how countries borrow money.

The increase in borrowing has led to a steep increase in the national debt, which now stands at just under £2.1 trillion.

The UK's overall debt has now reached 99.5% of gross domestic product (GDP) - a level not seen since the early 1960s.

The latest figures highlight the scale of the problems facing Chancellor Rishi Sunak as he prepares to unveil his next Budget on 3 March next year.

A Budget had been expected to take place in autumn this year, but it was scrapped because of the pandemic.

The Treasury will be seeking to bolster public finances after the huge rise in spending to fight coronavirus.

The chancellor has already imposed a pay freeze on at least 1.3 million public sector workers.

Double dip worries

Separately, the ONS has also revised its figures for the UK's economic growth this year.

The economy shrank a little less in the April-to-June period than previously indicated, by 18.8% instead of 19.8%.

And the rebound from July to September was a little bigger, with growth of 16% instead of 15.5%.

Ruth Gregory, senior UK economist at Capital Economics, said a double-dip recession was a clear possibility if the tier four Covid-19 restrictions were extended into 2021.

However, she said there was optimism that as long as vaccines were effective and widespread, GDP would "stage a strong rebound" in the second half of next year.

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December 22, 2020 at 08:40PM

https://www.bbc.co.uk/news/business-55408444