A faster – and more tax rich – recovery means borrowing for the financial year ending March 2022 is much lower than originally feared 26 April 2022 Today’s public finance data release gives the first estimate of borrowing in the second year affected by the pandemic. At £151.8 billion, borrowing in 2021-22 is estimated to be less than half that in 2020-21, and more than £80 billion lower than feared at the height of the pandemic, but it is still the third highest year on record (in cash terms). The key reason for the better-than-originally-feared public finances has been the unexpectedly strong – and tax rich – recovery from the pandemic. The data for March 2022 show borrowing of £18.1 billion – the second highest since monthly records began. The data continue to paint a picture of strong tax revenues but also rising debt interest payments as the impact of higher inflation on index linked gilts takes hold. James Smith, Research Director at the Resolution Foundation, said: “The latest data for the public finances show borrowing for the financial year ending March 2022 is more than £80 billion lower than forecast by the OBR at the height of the pandemic, but it is still the third highest year of borrowing on record in cash terms. “The better-than-feared public finances have been driven by a revenue-rich recovery with current tax receipts of £830 billion for 2021-22 – the highest on record. “The tightest income squeeze in generations is upon us, and with the public finances in better shape than feared at the height of the pandemic, the Chancellor can have little reason not to provide much-needed policy support to families as they deal with the higher inflation and energy bills that are now hitting their finances.”
