Borrowing breaks new records – but consolidation can only come once the recovery is secured

Commenting on the latest public sector finances, which showed that the Government borrowed £127.9 billion between April and June this year – in one quarter more than twice the level of borrowing over the whole of the previous year – Charlie McCurdy, Economist at the Resolution Foundation, said:

“This crisis is continuing to take its toll on the public finances, though the pace of borrowing slowed in June as the amount the Government is spending on emergency measures eased somewhat.

“The smaller than initially feared GDP fall means debt is now estimated to be below the size of the economy in June. But with growth set to remain weak for the foreseeable future, we should expect debt to continue to rise sharply over the coming months – hitting £2 trillion and rising back 100 per cent of GDP.

“Where debt ends up will depend on the path of the coronavirus crisis. And while there is a lot of uncertainty, the priority for the Government should be to act now to prevent a large rise in unemployment.

“In time the Chancellor will face the tough political challenge of putting the public finances back on a sustainable footing. But the time for the tax rises that will require is when a recovery has been secured.”