- The UK’s government debt has hit £2 trillion ($2.6 trillion) for the first time in history after policymakers doled out “extraordinary” fiscal support during the pandemic this year.
- Britain’s debt has exceeded 100% of economic output for the first time since the 1960s, the ONS said.
- The news comes about a week after the UK officially entered into recession as economic output dropped 20.4% in the second quarter.
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The UK’s government debt has exceeded £2 trillion ($2.6 trillion) for the first time in history, according to data released by the country’s national statistics authority on Friday.
That indicates Britain’s debt has exceeded 100% of economic output for the first time since the 1960s, the ONS said.
This month, the UK officially entered recession for the first time in 11 years as gross domestic product fell 20.4% in the second quarter.
COVID-19’s severe impact on public finances showed that the £150 billion ($197 billion) borrowed in the first four months of the 2020 financial year almost tripled the £56 billion ($73 billion) borrowed throughout the entire previous financial year (April 2019 to March 2020).
The figures reflect a high amount of government borrowing to support businesses and individuals against the economic downturn caused by the coronavirus.
The £26.7 billion ($35.2 billion) that the government borrowed in July “was the lowest monthly borrowing figure since March as fiscal support started to unwind,” said Ruth Gregory, senior UK economist at Capital Economics.
“Nonetheless, it is another huge sum and pushes borrowing in the year to date to £150.5bn.”
That amount is close to the £158.3 billion ($208 billion) of borrowing that the UK recorded in the year following the global financial crisis, “reflecting the extraordinary fiscal support” the government put in place to see the economy through the crisis, Gregory said.
Data released Friday also showed the UK’s retail sales have recovered sharply from big declines seen early in the pandemic.
Retail sales rose by about 3.6% this month, slightly above pre-pandemic levels, but “still lag what is expected from a normal July,” said Hinesh Patel, portfolio manager at Quilter Investors.
The Chancellor of the Exchequer Rishi Sunak is weighing options to delay his autumn Budget, which is meant to define Prime Minister Boris Johnson’s government term, in case of a second coronavirus wave.
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