Borrowing hits £35.9bn in a month as public debt soars to new record high

Chancellor Rishi Sunak. Credit: PA

The UK’s national debt, once again, hit a new record at the end of August, as the public sector borrowed another £35.9 billion to offset the impact of coronavirus.

Debt hit £2,023.9 trillion, making August the second consecutive record-setting month - in July national debt hit £2 trillion for the first time ever.

It comes as the government throws billions of pounds at attempts to offset the economic chaos caused by the Covid-19 pandemic.

The latest data from the Office for National Statistics (ONS) shows borrowing is now up to 101.9% of gross domestic product (GDP) - a measure of the combined value of all goods and services produced in the UK each year.

Again, continuing July's trend when borrowing rose higher than GDP for the first time since the early 1960s.

How has the coronavirus crisis hit borrowing?

The figures cast some light on the huge financial costs involved in keeping the economy working through the coronavirus crisis.

Most countries borrow money, even in good times.

Last year in August the country borrowed £5.4 billion.

Empty high streets have become a staple since the onset of the pandemic. Credit: PA Images

But the scale of borrowing is at a whole different level right now.

In August, the public sector borrowed more in a single month than at any time since monthly records began in 1993.

But it is still less than many had expected.

Based on the averages of analysts' predictions, Pantheon Macroeconomics has forecast £38 billion-worth of borrowing in August.

But the figure is unlikely to look much healthier as disruption from the pandemic continues into September and beyond.

On Thursday, Chancellor Rishi Sunak announced a series of extensions to existing programmes, including a replacement for the furlough scheme which has so far cost the Treasury more than £39 billion.

Officials in the Treasury have been forced to turn to loans to make up the cash - especially as the amount of tax being collected falls.

Friday’s figures from the ONS showed that central government’s tax receipts reached £37.3 billion last month - still £7.5 billion less than a year before.

While the amount of VAT, corporation tax and income tax collected by the tax man fell considerably, the ONS said.

The money was used to fund £78.5 billion worth of day-to-day spending at central government - which was £19.5 billion higher than August 2019.

Just over £6 billion of this funded the salaries of furloughed workers, while £4.7 billion paid for support to the self-employed.