UK borrowing soars, retail sales plunge as Covid-19 hits economy

[LONDON] Britain's government borrowed more than it has done in any month on record in April, pushing up a measure of public debt to close to 100 per cent of economic output, and retail sales fell by a record 18 per cent, as the coronavirus crisis hammered the economy.

April's borrowing of £62.1 billion (S$107.52 billion) was six times higher than in the same month last year and March's figure was revised up sharply to almost £15 billion as the government's emergency job-saving scheme began.

"We still think that public borrowing will equal about 15 per cent of gross domestic product (GDP) this year - greatly exceeding the 10 per cent peak in the 2008 to 2009 recession, even if a second virus wave is avoided," Pantheon Macroeconomics economist Samuel Tombs said.

Public debt, including the Bank of England's massive bond-buying, jumped to nearly 98 per cent of GDP, reflecting higher borrowing and a lower estimate of the size of the economy based on a scenario by Britain's budget forecasters.

That was the highest share of GDP by that measure since 1963, the Office for National Statistics (ONS) said.

The ONS also said British retail sales fell by the most on record in April, as much of the sector was shuttered by the government's coronavirus lockdown.

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Sales volumes fell 18.1 per cent in April from March, a slightly bigger fall than a median forecast for a drop of 16 per cent in a Reuters poll of economists.

James Smith, an economist with ING, said there might not be a quick bounce-back for retailers when the lockdown is lifted.

"Recent surveying from YouGov showed that just under half of people would be uncomfortable with returning to a clothing shop, although the jury is out on whether the public will become more relaxed by the time retailers do reopen next month," he said.

REUTERS