Today's public finances data showed the UK government borrowed Ł21.5bn in October pushing the total sum borrowed this fiscal year to date to well in excess of Ł220bn, and on course for a total annual spend of over Ł320bn this fiscal year, after the Chancellor extended the furlough scheme until the end of this fiscal year.

While it is entirely understandable for there to be a debate about these unprecedented levels of public borrowing, one has to question whether now is the right time to do it, given that we haven't as yet defeated the virus, or even got a vaccine program in place yet.

It's hard to imagine that there would have been similar conversations being had in 1940, when the country was one year into the second World War, yet suddenly here we are fretting about the costs of an invisible pandemic that has the potential to wreak economic havoc for some time to come.

There will be a time to worry about how all of these emergency measures will eventually be paid for, however one has to question whether now is the best to time to be talking about this, at a time when businesses are having to deal with so much uncertainty.

Talking about balancing the books now merely sows even more uncertainty amongst businesses as well as households about the government's willingness to support the economy, and seems somewhat premature when the economy is still in a state of lockdown.

It is much more important to support the long-term viability of the economy, and protect livelihoods in the short term, and worry about the longer term once the pandemic and its effects are largely in the rear-view mirror.

It's not as if borrowing costs are high, they are not, with bond markets fairly sanguine about the levels borrowing taking place not only here, but all over the world. Furthermore it's not as if we are alone in the problems facing the UK economy. Every other country in the world is facing the same seismic issues, which means that if the government is sensible the sums being spent can be paid back over decades in the same way the money spent in World War 2 was repaid. This pandemic should be viewed through a similar lens, with the money repaid gradually over decades.

The latest UK retail sales numbers for October also showed that the UK consumer decided to get in some early Christmas shopping before the November 5th lockdown kicked in, perhaps over concerns as to whether there would be time to do it in December.

While these October numbers are better than expected, coming in at 1.2%, it only means that the spending has been brought forward from November, and perhaps December, assuming the economy is allowed to unlock on December 2nd, with concerns growing that any unlocking could well be minimal in order to avoid a potential pre-Christmas spike in infections.

The pound exhibited little in the way of any reaction to the latest set of numbers.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70.5% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis

Latest Forex Analysis

Editors’ Picks

GBP/USD tumbles from the highest since 2018 on the Brexit impasse

The GBP/USD roller coaster continues with a downfall below 1.35 after the pair hit a 31-month high of 1.3539 earlier. Brexit talks have yet to yield an agreement. Negotiations are set to continue through the weekend.


EUR/USD battles 1.2150 after disappointing NFP

EUR/USD is trading off the 32-month highs amid bumps in US stimulus and vaccine distribution. Markets await the all-important US Nonfarm Payrolls missed expectations with 245K jobs gained in November. 


XAU/USD fails to break $1850 and turns to the downside

Gold peaked after the beginning of the American session at $1848/oz reaching the highest level since November 23 and then turned to the downside. It bottomed at $1829 and is it about to end the week hovering around $1830.

Gold news

Dollar downfall explained and what's next for markets

The safe-haven US dollar is hitting multi-month and multi-year lows against its peers while stocks are on fire. What is behind the risk-on rally? Valeria Bednarik, Joseph Trevisani, and Yohay Elam discuss markets' moving parts as 2020 nears its end.

Read more

Extra week of Black Friday!

Learn to trade with the best! Don't miss the most experienced traders and speakers in FXStreet Premium webinars. Also if you are a Premium member you can get real-time FXS Signals and receive daily market analysis with the best forex insights!

More info

Forex Majors