New official figures indicate that the UK’s national debt has surged to its highest level since 1962. As of June, the total government debt amounted to 99.5% of the country’s economic output, surpassing the peaks seen during the COVID-19 pandemic for the first time. The Office for National Statistics (ONS) also reported that government borrowing in June exceeded expectations.
Chancellor Rachel Reeves is expected to provide a comprehensive update on public finances by the end of this month. Government debt encompasses the cumulative amount owed by the government over the years, while borrowing reflects the deficit between public sector spending and tax revenues within a specific period.
Darren Jones, Chief Secretary to the Treasury, characterized the latest figures as a stark reminder of the “most challenging economic legacy” since World War II. Despite June’s borrowing figure of £14.5 billion being the lowest for that month in five years, reduced interest costs due to declining inflation helped temper the total, though it still surpassed economists’ forecasts.
Given the pressures to enhance funding for certain public services and electoral commitments against raising income tax, corporation tax, or VAT rates, many economists anticipate a rise in borrowing.