Government borrowing hits £24.3bn in May

The latest numbers from the Office for National Statistics have found UK government to hit £24.3bn – despite the economy reopening.

Total debt has reached £2.19trn, which is almost the total GDP.

Although restrictions have eased this month, government support schemes such as furlough have continued into summer.

“As we emerge from the pandemic, we are continuing to support people and businesses to get back on their feet and our Plan for Jobs is working,” said Rishi Sunak.

“It’s also important over the medium term to get the public finances on a sustainable footing. That’s why at the Budget in March I set out the difficult but necessary steps we are taking to keep debt under control in the years to come.”

Michal Stelmach, senior economist at KPMG UK, said:

“The reduction in spending from its peak at the start of the Covid-19 pandemic meant that government borrowing was down by £38bn in the first two months compared to last year, amounting to over a half of the improvement forecast by the OBR for the whole year.

“It should come as no surprise that borrowing has fared better than expected this year considering the improved economic outlook. We expect the deficit to fall to £211bn this fiscal year, undershooting the OBR’s forecast by around £23bn.

“Spending should continue to recover in the coming months as the economy absorbs more furloughed workers during the reopening phase. The furlough scheme, which the OBR expected to cost nearly £50bn less this financial year, is likely to undershoot that forecast thanks to stronger demand for staff and some companies returning unused cash to the Exchequer,” he added.

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