London, July 19, 2024, The Europe Today: United Kingdom’s national debt has soared to its highest level since 1962, according to new official figures released by the Office for National Statistics (ONS). The total stock of government debt amounted to 99.5% of the value of the economy in June, surpassing the peaks seen during the coronavirus pandemic.
The ONS figures also revealed that the government’s borrowing exceeded expectations in June. A statement on the state of public finances is anticipated from Chancellor Rachel Reeves by the end of the month.
Government debt refers to the cumulative amount of money owed by the government, built up over years. Borrowing, on the other hand, refers to the difference between public sector spending and income from taxes within a specific period.
Chief Secretary to the Treasury Darren Jones remarked that the latest figures serve as a “clear reminder” of the “worst economic inheritance” since the Second World War. Although last month’s borrowing figure of £14.5 billion was the lowest June total in five years, aided by lower interest costs linked to falling inflation, it still surpassed economists’ forecasts.
With pressures to increase spending on certain public services and election promises to avoid raising income tax, corporation tax, or VAT rates, many economists predict a rise in borrowing.
Dennis Tatarkov, senior economist at KPMG UK, commented, “The new chancellor faces the daunting task of funding the government’s agenda while maintaining public finances on a sustainable footing. A combination of high spending levels and weak growth prospects will present uncomfortable choices – deciding between more borrowing or substantially raising taxes if spending levels are to be maintained.”
In a related development, separate ONS figures showed that retail sales fell more than expected last month, with shops citing cold weather and election uncertainty as contributing factors. Retail sales volumes dropped by 1.2% in June, following strong growth in May. Non-food retailers, including clothes shops and department stores, experienced the most significant decline, with sales falling by 2.1%.
“Retailers suggested election uncertainty, poor weather, and low footfall affected sales,” the ONS reported.
