The UK’s budget deficit is set to reach levels not seen since the end of the Second World War, according to a new scenario put forward by the Office for Budget Responsibility (OBR)
The group’s modelling suggests that net borrowing, commonly known as the budget deficit, will reach £294.8bn in 2020-21, or 15.2 per cent of GDP.
The figure is more than five times the budget deficit predicted before the UK entered lockdown. It is also higher than what the OBR forecasted last month, when it suggested net borrowing could reach 13.9 per cent of GDP.
At the peak of the financial crisis, the UK’s budget deficit reached 10.2 per cent of GDP.
The OBR also estimates the government’s grant scheme for furloughed workers, called the Coronavirus Job Retention Scheme, will cost the Treasury £56bn in gross spending, up from the £42bn forecast last month.
Lastly, its scenario said the national debt would reach 95.8 per cent of GDP, the highest since 1963. That was revised up slightly from 94.6 per cent predicted last month.