Britain’s public debt has burst through the £2tn ($2.65tn) mark for the first time, according to official figures.
New data from the Office for National Statistics (ONS) on Friday shows public debt at the end of July was bigger than the size of the entire UK economy for the first time in more than half a century.
Public sector debt totalled 100.5% of GDP, a surge of 20.4 percentage points compared to a year earlier. It is the first time the figure has been larger than GDP since 1961.
The UK government has ramped up spending on support for firms, workers, and public services to alleviate the devastating economic damage of the coronavirus and lockdown measures this year.
But GDP and tax receipts have taken a heavy hit as firms’ and workers’ incomes have plummeted, with many tax payments also deferred.
It has forced UK chancellor Rishi Sunak to significantly raise government borrowing. UK government borrowing in July came in at £26.7bn, the fourth highest in any month since records began in the early 1990s. Total borrowing between April and July was almost three times higher than the entire previous financial year.
The furlough scheme, grants for the self-employed, a temporary stamp duty holiday, emergency cash for Transport for London, and several loan schemes for business are among the crisis measures to have pushed up spending.
Borrowing costs are near historic lows and the crisis continues to hammer the economy, but the chancellor has already signalled his desire to put the public finances on a more “sustainable” footing.
The furlough scheme is one of the most expensive policies, and is still subsidising millions of workers’ wages. It is being gradually tapered off and will end in October, despite warnings it has already started triggering mass job losses.