Government borrowing in April at second highest level ever
Nonetheless, this is still down from the figure for April 2020 when borrowing was recorded at £47.3bn, though represents a significant increase from 2019 when April’s borrowing came to £10.6bn.
What’s more, the official figure was lower than had been expected by some. The Office for Budget Responsibility (OBR), for example, had predicted borrowing would be worth £39bn.
As a result, public sector net borrowing for the financial year is estimated to have reached £300.3bn. This is the highest borrowing since financial year records began in 1946, though is down by £2.8bn from the first provisional estimate issued last month.
Rising tax receipts
Tax receipts for the month were up by 7% from the same point last year, coming to £58bn, as parts of the economy began to reopen following the latest national lockdown. Spending by central government bodies was also down year-on-year, at £95.9bn, a drop of 11.9% on April 2020.
VAT receipts rose 8.8% year-on-year, which is notable given the fact that VAT is temporarily cut to just 5% for certain sectors, while non-essential retailers were closed until 12 April. Income tax and Capital Gains Tax receipts jumped by almost a third (31.1%) year-on-year off the back of an increase in earnings.
Howard Archer, chief economic advisor to the EY ITEM Club, pointed out that the ONS is yet to include estimates of the likely level of write-offs from the various government-backed loan schemes in these figures, which the OBR currently expects to be around £27.2bn, a similar figure to that floated by the National Audit Office last year.
He continued: “The Government’s measures to support businesses and jobs affected by Covid-19 still affected receipts in April although these clearly benefited from stronger economic activity as well as an improved economic labour market.
“Meanwhile, government expenditure continued to be lifted by measures to support the economy and jobs.”