UK government borrowing hits February record as virus impact continues.

Government borrowing levels continued to set new records last month, reflecting the cost of supporting the UK's economy during the pandemic.

The government borrowed £19.1bn in February, the highest figure for that month since records began in 1993.

Measures such as furlough payments have hit government finances hard.

However, February's borrowing figure - the difference between spending and tax income - was not as high as some economists had forecast.

Borrowing for the financial year to date - between April and February - has now reached £278.8bn, the Office for National Statistics said, a record for that period.

The Chancellor, Rishi Sunak, said: "Coronavirus has caused one of the largest economic shocks this country has ever faced, which is why we responded with our £352bn package of support to protect lives and livelihoods.

"This was the fiscally responsible thing to do and the best way to support the public finances in the medium term."

The latest ONS figures showed the government spent £3.9bn last month on job support measures alone.

They also revealed a fall in tax income, notably from lower VAT, business rates and fuel duty, although they also showed money coming in from self-employed tax payments rose by £900m from last year.

Total public sector debt has risen to £2.13 trillion, according to the ONS. The figure almost exceeds the size of the UK's economy, with debt having reached 97.5% of annual economic output.

Debt levels as high as this have not been seen since the early 1960s.

The ONS said: "Although the impact of the pandemic on the public finances is becoming clearer, its effects are not fully captured in this release, meaning that estimates of accrued tax receipts and borrowing are subject to greater than usual uncertainty."

Ruth Gregory, senior UK economist at Capital Economics, acknowledged the dire state of the UK's finances but said the government's increased spending was the only sensible course at this time.

She said: “Today's figures are pretty terrible, but it is important to take in to account the economy as well. The chancellor is doing the right thing in continuing to support the economy.”

“His action in the Budget to extend many of the existing schemes means the rug will not pulled out from under the feet of households and businesses”.

"If we can limit the damage to the economy now, when the crisis ends it means the country will be stronger amore able to cope with that debt."

Separately, the government said it would receive £1.1bn from selling part of its stake in NatWest Group.

The sale, which will complete on 23 March, will cut the size of the government's stake in the bank from almost 62% to 59.8%.

Posted on Mar 18, 2021.

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