‘Britain’s public sector net debt in May reached its highest level in over six decades and now exceeds the country’s annual economic output, the Office for National Statistics (ONS) revealed on Wednesday. This comes as government borrowing has outpaced expectations.
Public sector net debt excluding borrowing from state-controlled banks hit £2.567 trillion ($3.28 trillion) at the end of last month, which amounted to 100.1% of gross domestic product (GDP), the ONS said.
This is the first time that debt has stood above 100% of the country’s GDP since 1961, meaning that public sector borrowing is now larger than the UK's economy.
Government borrowing reached £20.045 billion ($25.5 billion) in May, down £3 billion ($3.8 billion) from April but still exceeding consensus expectations of £19.5 billion ($24.8 billion), according to the ONS. Last month’s borrowing figure was £10.7 billion ($13.6 billion) higher than in May 2022 and was the second-highest level recorded in the month of May since monthly records began in 1993.
The ONS released the debt figures along with the latest inflation data, which showed that consumer price growth remained persistently high in Britain.
“This will likely drive up spending through increased debt interest payments and inflation-linked benefits and tax credits,” PwC economist Divya Sridhar said.
Inflation in the country stood at 8.7% in May and exceeded expectations for the fourth month in a row.’