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.
Its model suggests that the percentage of GDP taken up by net borrowing – commonly known as the budget deficit – will reach 15.2% in 2020/21.
That’s an increase compared to the scenario it published last month, which suggested the national budget deficit would reach 13.9% of GDP.
At the peak of the financial crisis, the UK’s budget deficit only reached 10.2% of GDP.
Net borrowing is expected to reach £294.8bn in 2020/21.
That’s more than five-times higher than the level predicted in the budget forecast before the UK entered lockdown, when it was £54.8bn.
The Office for Budget Responsibility also estimates the Coronavirus Job Retention Scheme will cost the government £56bn in gross spending – up from the £42bn predicted last month.
Looking at the total national debt, its new scenario expects it to reach 95.8% of GDP – levels not seen since 1963.
That was revised up slightly from 94.6% predicted in the model last month.