Annual borrowing to equal 15.2 per cent of the economy, OBR says
The Office for Budget Responsibility [OBR] has forecast annual borrowing to equal 15.2 per cent of the UK economy, after the cost of the government’s Covid-19 response rose to £123.2 billion.
It is an increase on the OBR’s previous estimate of Covid-19 government costs, which stood at £103.7 billion.
The OBR’s most recent official projection, made following Rishi Sunak’s March 11 Budget, estimated that annual borrowing would hit £55 billion.
The new forecast borrowing percentage against the economy would be the highest seen since the end of the Second World War, when 22.1 per cent of the value of the economy was borrowed.
The additional spending has also pushed the 2020/21 deficit over the 15 per cent recorded in 1945/46.
The total amount of annual borrowing is predicted to hit £298 billion.
The costs of extending the Job Retention Scheme until July has been a main driver, while an additional £20 billion could go on top of that depending on the details of its extension to October.
Meanwhile, an additional £1 billion has been factored in due to increased welfare, with Universal Credit claims up since the pandemic began.