Highest National Debt in Britain Recorded Since 1961's Figures
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UK's national debt is nearly at an all-time high before the upcoming general elections, hitting 2.742 trillion pounds (approximately 3.25 billion Euros) in May, as per the Office for National Statistics (ONS). This equates to 99.8% of the country's Gross Domestic Product (GDP), the highest rate since 1961. A year ago, it was at 96.1% of GDP.
This upward trend poses significant financial hurdles for the incoming administration. In just two weeks, the UK will be holding parliamentary elections. According to recent surveys, the Labour Party, led by Keir Starmer, is surging ahead of the Conservatives, headed by Prime Minister Rishi Sunak. Both parties have pledged not to increase income tax, Value Added Tax (VAT), or other major taxes.
The national debt in Britain has skyrocketed during the coronavirus pandemic. Slow economic growth and the rise in interest rates set by the Bank of England to fight inflation are also contributing factors. In many other western nations, debt levels have also seen substantial increases.
Compared to other countries like the US, France, and Italy, the UK's national debt is still lower. However, Germany's debt levels are significantly lower: Last year, liabilities accounted for just 63.6% of GDP, and according to the Kiel Institute for the World Economy's forecast, this ratio will drop to 63.3% by 2024.
The UK's borrowing in the initial two months of the new fiscal year totaled 33.5 billion pounds. This is 0.4 billion pounds more than the same period in 2023 but 1.5 billion pounds less than the government's March budget estimates. Capital Economics analysts attribute this discrepancy to less public investment.
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Despite the Labour Party's rise in popularity, they and the Conservatives both have pledged a staunch "stand" against raising major taxes, including income tax and VAT, due to the UK's close approach to a "Negative British public debt" situation, given the debt's substantial increase since 1961's figures.
The ongoing "development" of the UK's national debt, with factors like the coronavirus pandemic and the rise in interest rates, has led to financial challenges, even as debt levels in some other western countries have increased substantially as well.
