British Public Debt Exceeds 2 Trillion Pounds For The First Time

Britain’s public debt exceeded 2 trillion pounds ($ 2.65 trillion) for the first time, underscoring the challenge facing Finance Minister Rishi Sunak, who is under pressure to provide more emergency support for the economy ravaged by the coronavirus pandemic.

Net debt in July, which excludes public banks, rose to £ 2.004 trillion. That equates to 100.5% of Britain’s economic output, the highest since 1961, when the country was still struggling with the costs of fighting World War Two.

The high debt reflects a huge increase in government spending, which ranged from a large scheme to support jobs in the face of the Coronavirus and tax cuts to discounts for diners, as well as the blow to tax revenues from the general isolation measures in the country.

Debt has jumped by nearly £ 200 billion since the coronavirus crisis swept Britain.

Sunak said the crisis had put public finances under great pressure, but without the huge government spending spree, conditions would have been much worse.

Britain’s budget forecasters warned last month that the debt would exceed the two trillion pound barrier this year before continuing its strong rise to 2.5 trillion in the 2022-2023 fiscal year and 2.6 trillion by the mid-20s.

Borrowing in the April-July period rose to 150.5 billion pounds, nearly three times the government borrowing in the previous financial year.

In July alone, borrowing was 26.7 billion pounds, the lowest since the lockdown began, and the June figure was revised down by 6 billion pounds.

But the Office for National Statistics said it had revised up its estimate of the deficit in the 2019-2020 fiscal year to 56.6 billion pounds, making it nearly 8 billion pounds more than the initial forecast.

In addition to higher spending and lower tax revenues, the debt is rising as a proportion of GDP due to the significant contraction in the size of Britain’s economy during the general isolation measures aimed at combating the Coronavirus.