UK Public Debt Surges to £270bn
Britain has borrowed another £34.1 billion last month, increasing public sector debt to £270.8 billion in the first nine months of Q1 2021, according to official figures. What’s contributing to this?
Loss of tax revenue
Since the beginning of the pandemic, tax revenues have plummeted as companies have been taking major profit losses amid mandatory closures. This has government officials considering raising taxes for the upcoming budget. There’s been reports that corporation tax could be increased from 19% to 23% next March. It is unclear if an increase in taxes will be implemented following the new lockdowns and a new Covid-19 strand on the loose.
Increased government spending
General Government spending has also increased dramatically. In December 2019 spending was around £26.1, compared with £86.2 billion in the same month of 2020. Government net borrowing has thus become 12.7% of the UK’s GDP and this is just the beginning. The Office for Budget Responsibility has projected that the amount borrowed this year could reach £393.5 billion by March 2021.
The Office for National Statistics has stated that extra funding is still needed to support Government Covid-19 measures, programs and small businesses. Public sector debt, represented as a ratio of GDP, is already nearing 99%. If this trend continues, public debt levels could far surpass this ratio, reaching levels not seen in decades.