Chancellor Rishi Sunak warned of some 'difficult decisions' ahead as official statistics revealed that Britain's public debt had risen above 2 trillion pounds for the first time, largely because of the extra burden on the economy as a result of the coronavirus lockdown. Sunak, who has been leading the country's economic response to the crisis with a series of measures such as job retention and loan schemes, said the figures from the Office for National Statistics (ONS) are a “stark reminder” that public finances need to be reined in.
'Today's figures are a stark reminder that we must return our public finances to a sustainable footing over time, which will require taking difficult decisions,' said the finance minister. “It is also why we are taking action now to support the growth and jobs which pay for our public services, by helping businesses to reopen safely and, through our plan for jobs – protecting, supporting and creating jobs – to ensure that nobody is left without hope,” he said. The government borrowing figure at the end of July stood at 227.6 billion pounds higher than the same month last year, according to the ONS data.
It also showed borrowing had rocketed to a record 150.5 billion pounds in the current financial year as Britain sought to combat the impact of the coronavirus emergency – 128.4 billion pounds more than between April and July last year. Around 26.7 billion pounds was borrowed in July alone, the fourth highest amount of any month since records began in 1993.
This has pushed public sector debt beyond the nation's entire gross domestic product (GDP) – the value of everything produced in the UK in a year – hitting 100.5 per cent of GDP at the end of July, the first time it had risen above 100 per cent since 1961, the ONS said. Sunak admitted that the figures show that the pandemic has put the country’s public finances under “significant strain” and stressed that action has been taken by his Treasury department to offer support.
“Without that support things would have been far worse,' added Sunak. Experts are warning that there is worse to come, but that things will get better after that. However, the sheer size of the public debt will be a cause for considerable concern for some time as some of the coronavirus schemes, including Sunak’s Eat Out to Help Out discount scheme, are rolled back from this month.
According to separate figures on the dine-out scheme released this week, more than 85,000 outlets are now signed up to offer as much as 50 per cent off the bill on food or non-alcoholic drinks between Monday to Wednesday, with the state picking up the balance. Britain is breathing life back into hospitality by eating out to help out – with at least 35 million meals served up in the first two weeks alone, that is equivalent to more than half of the UK taking part,” said Sunak.
“I encourage everyone to continue to safely enjoy this scheme – it is vital people continue to support the 1.8 million people who work in the sector,” he said in reference to the scheme he had launched for the month of August to boost the hospitality sector after a long period of coronavirus shutdown.
