In the first half of the fiscal year, which began in April, Britain’s budget deficit has risen to the unprecedented level of GBP 208.5 billion. This happened due to the high expenditure of the British government to drive the economy through the coronacrisis.
For the month of September there was a deficit of 36.1 billion pounds, which is higher than economists had expected on average. For example, the government spent a lot of money supporting companies and sending workers on paid leave so that they would not be dismissed. In return, there is lower revenue from taxes, which means that more has to be borrowed. Britain’s public debt has now risen to over £ 2 billion.
The government expects the budget deficit to reach GBP 372 billion throughout the fiscal year, representing almost 19% of the UK’s gross domestic product (GDP).
Finance minister Rishi Sunak stated that the economic situation would have been much worse if the government had not taken action to protect employment. According to him, maintaining jobs during the crisis is a top priority. As the economy picks up again, the government will take steps to improve public finances again, says Sunak.
The British statistical office also announced that inflation increased by 0.5% on an annual basis in September, after an increase of 0.2% in August.