(Bloomberg) -- Britain’s budget deficit swelled further in May, taking government debt above 100% of gross domestic product for the first time since the financial year ending 1963.
Borrowing stood at 55.2 billion pounds ($69 billion) last month as spending surged and tax revenue plunged, the Office for National Statistics said Friday. It brings the total since the start of the fiscal year in April to 103.7 billion pounds, the biggest two-month total on record.
The increase reflects the cost of Chancellor Rishi Sunak’s unprecedented interventions to help prop up the economy, and the deficit is likely to swell further this year. The government is currently paying the wages for almost 12 million jobs and more stimulus including tax breaks and infrastructure projects potentially in the pipeline.
May’s number was the highest single month for borrowing on record, after April’s record figures was revised down to 48.5 billion.
The figures show central government spending surged almost 50% in the month and revenue plunged by over 28%. Net debt including Bank of England programs jumped to 100.9% of GDP.
The budget deficit in the current fiscal year, forecast to be around 55 billion pounds when Sunak took over, is now on course to top 270 billion pounds, according to the latest survey of private-sector economists compiled by the Treasury. That’s equal to about 14% of GDP, more than at any time since World War II.
The pain may last beyond this year, with a separate report from the Institute for Fiscal Studies Friday warning that persistent economic weakness could mean that U.K. borrowing levels remain elevated well into the future.
A slow recovery could mean borrowing could be as much as 70 billion pounds more in the 2024-25 fiscal year then was predicted in March, the IFS said, while even a faster rebound may mean the figure is 40 billion pounds higher.
For now though, the precise cost of the pandemic is so unpredictable that the Debt Management Office has only announced its issuance plans through the end of July. The total for the first four months of the fiscal year stood at 225 billion pounds, and the DMO will release an updated outlook on June 29.
The saving grace for Sunak is that support from the Bank of England is keeping borrowing costs manageable. The central bank increased its bond buying plan by 100 billion pound on Thursday, leaving them on track to buy almost 300 billion pounds of gilts by the end of the year.
Both numbers are still well above any figure before the virus hit, with monthly borrowing never exceeding 22 billion pounds even in the depths of the financial crisis.