Running on empty... UK's budget deficit will worsen further as the government pushes more relief funds into the economy. Image Credit: Reuters

London: Britain posted a record budget deficit in April as the government unleashed an unprecedented package to prevent the collapse of the virus-stricken economy. The budget deficit stood at 62.1 billion pounds ($76 billion) last month, the Office for National Statistics said.

The figure is equal to the total borrowing in the whole of the previous fiscal year.

The monthly deficit is the most since modern records began in 1993, and over 50 billion pounds more than April 2019. Even during the financial crisis, monthly borrowing was never more than 22 billion pounds.

Central government spending surged 57 per cent and revenue plunged 27 per cent. The figures reflect the cost of interventions announced by Chancellor Rishi Sunak, including paying the wages of 8 million furloughed workers, a surge in welfare claims and the hit to tax revenue from a shrinking economy.

No tightening for now

With net debt predicted to exceed 110 per cent of GDP by September, a debate is raging over how Britain should pay the bill. Borrowing costs are at record low and pressure is mounting on the government not to return to the era of austerity and instead reduce the burden by letting growth rip.

Despite some easing of the lockdown measures in place since March 23, shops remain shuttered and businesses closed, putting the country on course for its deepest recession since the early 1700s.

The Office for Budget Responsibility, which prior to the crisis predicted borrowing of 55 billion pounds in the current fiscal year, now expects a shortfall of over 300 billion pounds, or 15 per cent of gross domestic product.

The deficit in the whole of the 2019-20 fiscal year, which ended last month, was revised up to 62.6 billion pounds.