UK borrowing drops as COVD-19 lockdowns ease: Data

UK government borrowing dropped in June with easing lockdown measures boosting the economy, official data showed Wednesday.

Public sector net borrowing slid to £22.8 billion ($31 billion, 26.4 billion euros) last month, the Office for National Statistics (ONS) said in a statement.

Although down £5.5 billion compared with June 2020 when the UK was in a strict lockdown, the latest number was still the second highest June level on record.

A sizeable amount of the government’s borrowing since the start of the pandemic has gone on a furlough scheme to pay the bulk of wages for millions of private sector workers.

“I’m proud of the unprecedented package of support we put in place to protect jobs and help thousands of businesses survive the pandemic, and that we are continuing to support those who need it,” finance minister Rishi Sunak said following Wednesday’s data.

“However, it’s also right that we ensure debt remains under control.”

An influential think tank on Wednesday warned that while government borrowing was set to come in lower than expected for the UK fiscal year to March 2022, Chancellor of the Exchequer Sunak was unlikely to be able to embark on a post-pandemic spending splurge.

“Permanent economic damage done by the pandemic and rising debt interest costs mean that… the chancellor has little, if any, additional headroom,” the Institute for Fiscal Studies said in a report.

Economists reckon on interest rates rising sooner than expected as the reopening of economies pushes up inflation.

At the same time, the highly-transmissible Delta variant of the coronavirus is sweeping the globe and forcing some countries to reimpose restrictions.

But in England, the bulk of lockdown measures were lifted on Monday. Tougher restrictions remain across the rest of the UK.

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