The cost of the government’s efforts to combat the coronavirus pandemic has risen to £123.2bn, according to latest estimates from the government’s independent economics forecaster.
The Office for Budget Responsibility’s previous estimate was £103.7bn. The increased cost of the government’s furlough scheme is the main cause.
It now expects annual borrowing to equal 15.2% of the UK economy.
That would be the highest since the 22.1% seen at the end of World War Two.
The extra spending has pushed the deficit identified for 2020-21 in the OBR’s reference scenario, which it says is not a formal forecast, above the 15% in 1945-46, which included VE Day.
Borrowing for this year is calculated to be £298bn, up £26bn on the first attempt to calculate the impact of the pandemic a month ago.
This is mainly because of the extra costs of extending the furlough scheme to the end of July.
Including the extra extension of a modified scheme until October could add an additional £20bn, depending on the as yet unannounced details of the scheme.