The Treasury is expecting a default on nearly £21 billion worth of government-backed Covid loans.

The Office for National Statistics (ONS) has revised upwards its assessment of record public borrowing.

Loan schemes for businesses, like the bounce back loan, dished out £80 billion to keep firms afloat during the Covid crisis.

Public debt as a share of gross domestic product (GDP) in August totalled £2.2 trillion - that's 97.6% of GDP - the highest ratio since March 1963.

Isabel Stockton, research economist at the Institute for Fiscal Studies, said: "For the first time these figures include an allowance for the degree to which emergency government-backed business loans made through the pandemic will never be repaid.

"The Office for National Statistics estimates that non-repayments will total £21 billion, which would be just over a quarter of the £80 billion loaned out.

"This is a big number, but not as big as feared by the Office for Budget Responsibility whose Budget 2021 estimate was that £27 billion would not be recouped. Loans that are not expected to be repaid add to estimated borrowing when the loan is made.

"So, these bring estimated borrowing in 2020-21 up to £325 billion, compared to £298 billion estimated in last month's figures. This is below the £355 billion assumed by the OBR's March 2021 Budget but is, of course, much higher than the £55 billion forecast on the eve of the pandemic in the March 2020 Budget."