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21/06/24
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UK Public Debt Hits Highest Level in 63 Years
On June 21, the UK’s Office for National Statistics revealed that there was a rise in the country’s public debt in May, reaching levels last seen in sixty-three years. This shows that the incoming administration will face more financial challenges after the general election.
According to the data, public sector net debt excluding public-sector banks was equivalent to 99.8 percent of GDP last month, representing a 3.7 percent increase relative to the reading in May 2023.
Public sector spending and income, excluding public-sector banks, differed by £15.0 billion during the month, representing an increase of £0.8 billion relative to May 2023, but below the Office for Budget Responsibility’s expected £15.7 billion and April 2024’s £18.4 billion.
Further, total borrowing including public-sector banks was £14.1 billion, representing an increase of £0.8 billion relative to the reading in May 2023. Another government will be elected in two weeks with the Labour Party currently leading the Conservatives in the polls.
Labour and the Conservatives want to uphold current budget rules with official forecasts required to show that debt as a share of GDP is declining in the fifth year of the forecast.
Likewise, they have promised not to raise income tax rates, value-added tax rates or other major levies. However, according to government budget forecasts three months ago, tax as a share of GDP was moving towards hitting its highest in seventy-six years.
According to Capital Economics consultants, the borrowing numbers coming in lower than forecast suggest less public investment and may not be quite as favorable for the next finance minister in the UK.
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