UK government debt hits record £2tn

The UK government’s public debt has surpassed £2tn for the first time.

According to figures from the Office for National Statistics (ONS), debt has jumped £228bn over the last year amid the coronavirus pandemic.

Borrowing between April – July was “the highest borrowing in any April to July period” since records began in 1993.

Debt is now 100.5% of GDP, a figure we haven’t seen since 1961.

“The coronavirus (COVID-19) pandemic continues to have a significant impact on the UK public sector finances,” said the ONS.

“These effects arise from both the introduction of public health measures and from new government policies to support businesses and individuals.”

The surge in debt compared to this time last year is £227.6bn.

The rise in debt has been contributed by the government’s furlough scheme, which is set to end in October.

Rishi Sunak said about furlough: “Furlough has been a lifeline for millions supporting people and businesses to protect jobs. But it cannot and should not go on forever. It gives people false hope that they would be able to return to the jobs they had before.”

The scheme is estimated to cost the government an estimated £80bn in total.

Schemes such as Eat Out to Help Out are also set to be costly. Running through the month of August, the scheme is expected to cot £500m.

“With at least 35 million meals served up in the first two weeks alone, that is equivalent to over half of the UK taking part and supporting local jobs in the hospitality sector,” said Sunak, two weeks into August.

“To build back better we must protect as many jobs as possible, that is why I am urging all registered businesses to make the most of this by claiming back today – it’s free, simple and pays out within five working days” he added.

 

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Safiya focuses on business and political stories for UK Investor Magazine. Her interests include international development, travel and politics.