In a development that highlights the challenges facing Britain, the country’s finance minister Rishi Sunak has borrowed a record $285 billion (215 billion pounds) in the first seven months of this financial year as he prepares his war chest to fight off coronavirus-induced headwinds facing the country’s economy.
Britain’s borrowings in October alone came in at 22.3 billion pounds while the country’s debt continues to remain on the borderline, just slightly lower than its 60-year high.
In a separate development, official data released on Friday shows, retail sales rising by 1.2% in October, and were up by 5.8% higher when compared to the same period a year ago.
British retailers however are facing a grim November with many shops closed because of the coronavirus-induced COVID-19 pandemic, which has hit Britain harder than other large economies.
The British government is scheduled to borrow nearly 400 billion pounds this financial year – its highest borrowing relative to the size of the economy, since World War II.
“This is the responsible thing to do, but it’s also clear that over time it’s right we ensure the public finances are put on a sustainable path,” said finance minister Rishi Sunak.
On November 25, Britain’s Office for Budget Responsibility is scheduled to publish new forecasts of borrowing; on that day, Sunak will also be unveilling spending plans for the next financial year.
The British government has already stated, it will approve the biggest increase in military spending since the Cold War.
According to media reports, Sunak is likely to freeze the pay of teachers and police while the government has refused to confirm whether it will keep foreign aid spending at 0.7% of the country’s GDP.
Figures from the Office for National Statistics shows, public debt standing at 2.077 trillion pounds as of the end of October.
A stronger economic growth in October during the third quarter helped bring down debt vis-à-vis Britain’s GDP, from September’s peak of 101.2% – its highest level since 1960/61.
The country’s central bank, Bank of England, has warned that the country is likely to see some long-term economic damage. Last month, the International Monetary Fund had warned that Britain will have to raise taxes to fill the spending gap created by the pandemic.
“Feedback from a range of businesses suggesting that consumers had started Christmas shopping earlier this year, further helped by early discounting from a range of stores,” said the ONS.
Retails sales are showing a strong surge after the lockdown, with sales volumes rising by 6.7% compared to levels before the pandemic. Much of this is coming from online sales, while some sectors, including high-street clothes stores continuing to struggle.