UK Debt Exceeds £2trn, Tops Country’s 100% GDP For First Time

UK’s government debt has exceeded £2 trillion, surpassing 100 percent of the country’s annual gross domestic product, or total economic output, for the first time since the 1960s.

This was revealed in the latest data released by the country’s Office for National Statistics (ONS) on Friday.

The debt is attributed to the huge increase in borrowing which is needed to fight the COVID-19 pandemic and also support businesses and individuals against the economic downturn.

The data noted that as of July, the total accumulated debt hit £2.004 trillion ($2.61 trillion, 2.2 trillion euros).

The UK, this month, officially entered recession for the first time in 11 years as gross domestic product fell 20.4 percent in the second quarter.

ONS said the net borrowing between April and the end of July is estimated to have hit £150.5 billion.

In July alone, £26.7 billion was borrowed, “the lowest monthly borrowing figure since March as fiscal support started to unwind,” a senior UK economist at Capital Economics, Ruth Gregory said.

“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,” Chancellor of the Exchequer Sunak said.

“It is also why we are taking action now to support the growth and jobs which pay for our public service, by helping businesses to reopen safely.”

UK Debt Exceeds £2trn, Tops Country's 100% GDP For First Time

The data released on Friday, however, revealed that UK’s retail sales significantly recovered from the big decline seen early in the pandemic.

British retail sales jumped by 3.6 percent in July from June as shops, restaurants and pubs reopened.

“Retail sales have now regained all the ground lost during the height of the coronavirus restrictions as more stores open for trade and online sales remain at historically high levels,” ONS statistician Jonathan Athow said Friday.

“While still below their pre-pandemic levels, both fuel and clothing sales continued to recover.

“Meanwhile, food sales fell back from their recent peaks as people started to venture back into pubs and restaurants,” Athow added.

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