LONDON (Reuters) – Britain’s government is on track to borrow 298.4 billion pounds ($364 billion) during the current financial year due to the coronavirus, even before the full cost of an extension of its huge job support scheme is calculated, forecasters said.
The Office for Budget Responsibility raised its estimate for public sector net borrowing in 2020/21 by 25 billion pounds from its previous calculation of 273 billion pounds a month ago.
In March, before the government announced a lockdown for the economy, the OBR forecast a budget deficit of 55 billion pounds.
Much of the shortfall comes from lower tax revenues due to the economic slump, but the OBR also raised its estimate of the cost of the government’s spending and tax response to the crisis to 123.2 billion pounds from 103.7 billion pounds.
This includes the cost of only one of the four extra months until the end of October that the government’s coronavirus wage subsidy scheme will run, as announced finance minister Rishi Sunak on Tuesday. Employers will contribute to the costs of the scheme from August but the government has not yet said how big those contributions will be.
(Reporting by David Milliken)
