By Paul Hannon 
 

U.K. government borrowing relative to the size of the economy could hit its highest level since the end of the World War II, the country's budget watchdog said Tuesday.

The Office for Budget Responsibility, which provides independent forecasts based on government policies, said borrowing for the financial year ending in early April 2021 could be 218 billion pounds ($272.42 billion) more than it had expected last month, reaching 14% of economic output.

That surge in borrowing reflects the cost of government programs to support businesses and workers during the coronavirus-driven lockdown that began last month, as well as lower tax revenues.

The OBR said its figures weren't exact forecasts, and its intention was to give a sense of the scale of the change in the government's financial outlook since the coronavirus pandemic took hold in the U.K.

Its projections assume that the economy shrinks by more than a third in the three months through June, and that 2 million people lose their jobs during the second quarter.

The surge in borrowing could push government borrowing above 100% of gross domestic product during the financial year, but a sharp rebound in growth would bring it back down to 95% of economic output by the start of the next fiscal year, the OBR said.

Write to Paul Hannon at paul.hannon@wsj.com

(END) Dow Jones Newswires

April 14, 2020 08:48 ET (12:48 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.