The coronavirus crisis has pushed UK borrowing to the highest level since the end of World War Two.
Government borrowing – the difference between spending and tax income – hit £303.1bn in the year to March, the Office for National Statistics said.
Danni Hewson, AJ Bell financial analyst, said: “The eyewatering level of government borrowing has created something of a conundrum. It’s so high it seems unscalable but so high not paying it back leaves the country in a precarious position. Austerity is still a dirty word, particularly in the north of England where many people felt their own economy was only just getting back on an even keel as the pandemic shunted it off course once again. The spectre of future interest rate rises might be some way off but can’t be ignored. Higher taxes may seem to be an inevitability but balancing that with the need for consumers to feel confident enough in their future to spend the country into recovery requires delicacy.
“And the latest retail figures do show people are ready and willing to open their wallets, in fact sales in March this year were higher than those from February 2020. The biggest impetus seems to be for people to ditch their zoom uniforms and change into something a little less comfortable. Clothing sales were up 17.5% in March as people readied themselves to socialise and garden centres reported above average sales for the time of year as people readied their gardens to provide a comfortable backdrop for that socialising.
“What will cheer bricks and mortar retailers is the slight slow-down in online spending, sales fell 1.5% from February though they are still 23.1% higher than the same period last year.
“And of course, if the spend is enough, if the recovery is rapid then the need for higher taxes might not materialise and the conundrum might solve itself.”