U.K. budget deficit hits $286 bln in seven months

U.K. government borrowing climbed to a record 214.9 billion pounds ($286 billion) in the first seven months of the fiscal year, underscoring the tough choices facing Chancellor Rishi Sunak as he prepares for a significant announcement on spending next week.

The deficit in October alone totaled 22.3 billion pounds, leaving Britain on course for a shortfall approaching 400 billion pounds for 2020-21 as a whole and debt above 100% of GDP for the first time since the early 1960s.

The scale of the damage inflicted by the pandemic will be laid bare on Nov. 25, when Sunak unveils the cash each department will get to fund public services and investment in the coming year.

The spending review plans will be underpinned by new forecasts from the Office for Budget Responsibility, which is expected to echo the Bank of England and private-sector analysts by predicting the sharpest economic contraction since the Great Frost of 1709 and only a gradual recovery to pre-pandemic levels.

At almost a fifth of the economy, the deficit is set to be the largest in British peacetime -- a staggering deterioration from March, when the OBR was expecting just 55 billion pounds or around 2.5% of GDP.