Treasury borrows year’s worth of money in single month amounting to £62bn

Borrowing hits all-time high in April, as economists sound warning over record retail sales slump

Government borrowing surged to £62.1bn to April – the highest figure for any month on record after heavy spending in the face of the coronavirus pandemic.

April’s borrowing was six times higher than in the same month last year and was almost as much as the UK borrowed for the whole of last year, the latest figures from the Office for National Statistics showed.

The huge monthly borrowing total is significantly higher than analysts had predicted, with most economists having predicted just over £30bn for April.

Experts warned much of the economy could struggle to bounce back quickly after lockdown. Retail sales fell by a record 18 per cent, as restrictions continue to hammer the sector.

It comes after chancellor Rishi Sunak stepped up financial support for firms and employees after vast areas of business were forced to shut down due to tight restrictions on movement.

A fall in tax receipts has also significantly contributed to the rise in borrowing, with central government receipts sliding by 26.5 per cent for the month compared to April 2019.

This was driven by a combination of contracting economic activity, rising unemployment and weaker earnings, and tax breaks given to companies in response to the lockdown.

James Smith, an economist with ING bank, warned there might not be any quick bounce-back for retailers even if the easing of lockdown measures at the start of June allows many shops to re-open.

“Recent surveying from YouGov showed that just under half of people would be uncomfortable with returning to a clothing shop, although the jury is out on whether the public will become more relaxed by the time retailers do reopen next month,” he said.

John Hawksworth of PriceWaterhouseCoopers said it was “quite likely” the UK could now borrow as much as £300bn in the current financial year, six times as much as the government had planned.

Torsten Bell of Resolution Foundation think tank said April’s figures were only the “tip of the iceberg” and predicted this year’s borrowing would be “the highest since the war”.

The ONS cautioned that its first estimate of April borrowing could be significantly revised as the full impact of the outbreak becomes clearer.

Borrowing by the state in March 2020 has been revised up by £11.7bn to £14.7bn by the ONS. It said this was driven by a reduction in previous estimates of tax receipts and National Insurance contributions.

Public debt, including the Bank of England’s massive bond-buying, jumped to nearly 98 per cent of gross domestic product. That was the highest share of GDP by that measure since 1963, the ONS said.

The ONS also said that the government borrowed £62.7bn over the 12 months to the end of March.