Borrowing levels are both eye-wateringly large, and absolutely necessary to fight Covid-19 crisis

Commenting on the public sector finance figures for December 2020, which saw borrowing of £34.1 billion – the highest December since monthly records began in 1993 – and the third-highest borrowing in any month, Charlie McCurdy, Researcher at the Resolution Foundation, said:

“The fiscal cost of the Covid-19 crisis, nine months in, has pushed the UK’s debt-to-GDP ratio up to its highest level in almost six decades.

“The current lockdown restrictions also mean that the pace of borrowing is likely to overtake that forecast by the OBR as recently as last November. The Job Retention Scheme alone cost £4.7 billion in December, a figure that will rise significantly in January.

“This level of spending may be eye-wateringly large, but it is absolutely necessary in order to both tackle the virus, and protect families and firms from the crisis.”

The Foundation notes that the UK’s debt-to-GDP ratio hit 99.4 per cent in December – the highest level since 1962.

The total cost of the Coronavirus Job Retention Scheme so far is £48.8 billion, with a further £18.8 billion spent on the Self Employment Income Support Scheme.