UK public debt hits record high ahead of election

Net public sector debt (excluding state-owned banks) reached 2.742 trillion pounds ($3.47 trillion) or 99.8 percent of Britain's annual gross domestic product (GDP) in May, up from 96.1 percent a year earlier, the Office for National Statistics said.

People outside the Palace of Westminster, London, England. Photo source: Bloomberg

The rise in UK public debt came despite the government borrowing in May being lower than expected, at 15 billion pounds compared with the 15.7 billion pounds forecast by economists in a Reuters poll.

UK public debt has surged since the Covid-19 pandemic, with the country's public finances also hit by a slowing economy and record-high Bank of England interest rates. However, most other Western countries have seen debt levels rise sharply since the pandemic, and the UK's public debt is now lower than that of the US, France and Italy.

The Office for National Statistics report also said that total UK government borrowing reached 33.5 billion pounds in the first two months of the 2024 financial year, 0.4 billion pounds more than the same period in 2023, but 1.5 billion pounds lower than the government's budget forecast in March.

Speaking to Reuters, Alex Kerr, a representative of the research company Capital Economics, said that this level of public debt reflected a decline in public investment, and would bring many difficulties to the next British Government. Explaining this, Alex Kerr said: "The next government will not be able to do much to reduce the financial challenges that await them, partly due to the pressure from the increasing interest rates on government loans."

Britain is expected to see a change of government after the election on July 4, with the Labour Party led by Keir Starmer dominating the Conservative Party of Prime Minister Rishi Sunak, according to polls.

Both Labour and the Conservatives are understood to be intent on sticking to current budget rules, which would reduce the debt-to-GDP ratio. Both parties have also pledged not to raise income tax, VAT or other major taxes, but the government's March budget forecasts show tax receipts are on track to hit their highest level since 1948.

Source: https://congthuong.vn/no-cong-tai-anh-tang-ky-luc-truoc-them-bau-cu-327542.html