UK economic data bespeak bleak future for new government
Official data show UK state debt is equal to the country's economic output for the first time since the 1960s, amid the new government’s warnings about tough fiscal decisions in the year ahead.
The Office for National Statistics (ONS), the executive office of the UK Statistics Authority that reports directly to the British Parliament, said in a release on Friday that the public sector’s net debt "was provisionally estimated at 100 percent of gross domestic product at the end of August.”
The data also showed "the highest August borrowing on record, outside the (Covid) pandemic," Darren Jones, a senior official at the UK Treasury, said in a statement.
"Debt is 100 percent of GDP, the highest level since the 1960s. Because of the £22 billion black hole in our public finances we have inherited this year alone, we are now taking the tough decisions now to fix the foundations of our economy," he added.
The debt-to-GDP ratio was at 99.3 percent in July, with the ONS saying net borrowing in August reached £13.7 billion on increased spending on public services.
UK Prime Minister Keir Starmer, whose Labour party was elected in early July, had earlier warned Britons that the budget announcement on October 30 would be "painful," with tax rises and spending cuts expected.
The warning has been echoed by finance minister Rachel Reeves, who is supposed to deliver the country's fiscal plans to parliament.
The British government is already facing criticism from all sides over scrapping a winter fuel-benefit scheme for 10 million pensioners.
Starmer has repeatedly defended the move as a necessary "tough choice" to help fill a £22-billion ($29 billion) "black hole" in public finances which Labour claimed was left behind by the previous Conservative administration.
A British government watchdog last week forecast that UK state debt could almost treble over the next 50 years owing to an aging population and climate change.
The projection came from the Office for Budget Responsibility, which the government relies on for UK growth and inflation predictions.
Official figures last week showed that UK economic output stalled in July, dealing a blow to the new government that has put growth expansion at the top of its priority list.
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