UK debt larger than GDP for first time in over 50 years

The government borrowed a record amount in May

                                

The UK government’s debt is now worth more than its economy for the first time in more than 50 years. This comes after the government borrowed a record amount in May.

Gross central government debt – the money owed to the holders of gilts, national savings and creditors of Network Rail – exceeded £2 trillion ($2.5trn, €2.2trn) for the first time ever last month. 

It rose £200bn over the past year to hit £2.009trn, according to the Office for National Statistics (ONS). The figures showed the level of public borrowing to be on course to end the financial year about £300bn in the red, twice as bad as the worst year in the global financial crisis of 2008-09 and about 15 per cent of national income. 

In May, the headline measure of public sector net debt rose to £1,950bn, representing 100.9 per cent of national income. This was the first time it was above the level of gross domestic product since 1963, having declined from a peak of 258 per cent in 1946-47. 

The OECD forecast last week that debt levels would rise 18.6 percentage points of gross domestic product across advanced economies. Of the G7 countries, net debt is either above 100 per cent of GDP or expected to exceed it in France, Italy, the US and Japan as well as the UK. 

Only in Germany and Canada is debt expected to remain below this threshold. 

In May alone, the amount of cash borrowed by the UK government rose to £62.7bn, more than the total for the whole of the 2019-20 financial year.

On any measure of borrowing, the level in May was the highest since records began in 1993.

In the first two months of 2020-21 most measures of borrowing, such as the headline public sector net borrowing, were four times worse than the previous record year of borrowing in 2009-10.

FURTHER READING: Bank of England expected to spend new £100bn

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