Coronavirus: UK borrowing to hit record £275bn this summer to tackle crisis

Tom Belger
·Finance and policy reporter
Updated ·2 min read
UNITED KINGDOM - 2020/06/06: In this photo illustration banknotes of the pound sterling, The Bank of England £20 notes are seen displayed. (Photo Illustration by Karol Serewis/SOPA Images/LightRocket via Getty Images)
The UK government's borrowing has surged to cope with the pandemic. Photo: Karol Serewis/SOPA Images/LightRocket via Getty Images

The UK government plans to sell a record £275bn ($340bn) of debt between April and August, as it raises cash to fund its efforts to tackle the coronavirus pandemic.

The fundraising drive means the government will look to raise twice as much in five months as it raised in the whole of the last financial year.

Prime minister Boris Johnson’s government needs the cash to bankroll wide-ranging measures to relieve the economic downturn, estimated at more than £130bn this year. It also needs to compensate for tumbling tax receipts as activity suffered an unprecedented peacetime collapse during lockdown and several taxes have been deferred.

The government has spent £22.9bn just on the furlough scheme, subsidising more than 9 million workers’ wages at organisations hit hard by COVID-19 and the lockdown.

The borrowing figures were confirmed on Monday by the UK Debt Management Office, which will hold 33 government bond auctions in July and August. The latest figures mark a £50bn increase on its previous plans for April to July.

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The announcement comes amid increased government reliance on Britain’s central bank to buy up its debt.

Bank of England governor Andrew Bailey told Sky News last week the Bank of England was forced to step in and help the government raise money in March. Last week also saw the bank announce it would buy another £100bn of government bonds by the end of the year.

Meanwhile Boris Johnson is preparing to announce a new spending blitz on Tuesday. The government has announced plans to help boost economic recovery through a major construction drive for public sector projects, such as schools, hospitals and prisons.

An infrastructure delivery taskforce chaired by chancellor Rishi Sunak will be told there are “no excuses for delays” to building programmes.

But 50 new school improvement projects announced on Monday will only see construction begin in September 2021. Former chancellor Alistair Darling had called last week for the government to prioritise “shovel-ready” projects likely to support recovery more swiftly.