The government borrowed £19.1bn last month – the highest figure for February since records began in 1993, according to the Office for National Statistics (ONS).
It comes as the pandemic has ravaged the UK economy and finances. The ONS also said that borrowing was £17.6bn higher compared to February last year while borrowing for the year so far has reached £278.8bn, a record for that period.
Total public sector debt has now risen to £2.13 trillion, according to the ONS.
It comes as the Bank of England’s MPC voted unanimously to keep interest rates at 0.1% and maintain the QE programme yesterday.
Laith Khalaf, financial analyst, AJ Bell: “Since the beginning of last month, markets have gone from worrying about negative interest rates in the UK, to pondering when monetary policy might tighten. The Bank of England provided a pretty bullish assessment of the prospects for economic recovery in its February monetary report and since then the outlook has got even better. Further support from the Chancellor in the Budget, a roadmap out of lockdown and fiscal stimulus spilling over from the US, all support the case for a robust bounceback, as the UK economy opens up in the coming months
“But the message coming through from the Bank of England is that interest rates are going to remain nailed to the floor for the foreseeable future, despite the improving economic picture. The only thing that might prise rates upwards is a bout of inflation, but that would need to be both sustained and structural to compel the Bank of England to tighten policy. The Bank will look through rising inflation caused by temporary factors, such as recovering energy prices and would only deem inflation to be problematic if the UK was near full employment, which isn’t going to happen this year, or probably next.”
“That’s an issue for people who’ve amassed cash savings throughout lockdown, as low interest rates and rising inflation spell a loss of buying power. That will encourage savers to spend money in the real economy, which is of course part of what the Bank is trying to achieve with low interest rates. However, the Bank estimates that consumers will only spend 5% of their excess savings from the pandemic, leaving most untouched and potentially lagging behind price rises, in bank accounts offering next to no interest.