UK’s Net Debt Rises Over 100% of GDP for the First Time Since 1961

UK’s Net Debt Rises Over 100% of GDP for the First Time Since 1961

Britain’s public sector net debt surpassed 100 percent of gross domestic product (GDP) in May as borrowing was higher than expected, the Office for National Statistics (ONS) said on June 21.

The country’s public sector net debt, excluding that of state-controlled banks, touched 2.567 trillion pounds, an amount equivalent to 100.1 percent of its GDP. This is the first time that debt stood above 100 percent of GDP since 1961 although it was temporarily recorded as surpassing that threshold during the COVID-19 pandemic before being revised lower later.

The ONS said government borrowing in May stood at 20.045 billion pounds. A Reuters poll of economists had pointed to public sector net borrowing, excluding state-owned banks, of 19.5 billion pounds.

This marked a 3 billion pounds’ decline from April, but was still more than double that of May last year and represented the second-highest May borrowing figure since the government started keeping records.

UK’s annual inflation remained unchanged in May from April this year, the ONS added. Economists expect that this will likely drive up spending through increased debt interest payments and inflation-linked benefits and tax credits.