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U.K. Deficit at $370 Billion Highlights Sunak’s Fiscal Challenge

U.K. government borrowing surpassed a quarter of a trillion pounds in the first nine months of the fiscal year, a milestone that underscores the damage the pandemic has wrought on the public finances.

In December alone, spending exceeded tax revenue by 34.1 billion pounds as the cost of supporting companies and households through the crisis escalated, Office for National Statistics figures published Friday showed. That left the total deficit at a record 270.8 billion pounds ($370 billion)

The figures are only likely to worsen after Chancellor of the Exchequer Rishi Sunak stepped up support measures again to help the nation through the latest lockdown. That means that the budget deficit in the fiscal year as a whole could be around 20% of GDP, double the level reached in the aftermath of the financial crisis.

Sunak has spent almost 300 billion pounds in response to the pandemic, leaving total debt well above 2 trillion pounds. The chancellor will set out plans in his budget in six weeks’ time to start restoring order to the U.K.’s finances, according to a person familiar with the matter.