UK Government Debt Hits 583 Trillion Won This Year... Treasury Says "Economic Emergency Is Just Beginning"

UK Government Reveals Annual Fiscal Spending Plan to House of Commons... Borrowing Scale at 19% of GDP
Concerns Over Debt and Unemployment Rate... Fiscal Spending on Citizens' Lives, Public Services, and Infrastructure

Rishi Sunak, UK Chancellor of the Exchequer [Photo by AP News]

[Asia Economy Reporter Jeong Hyunjin] The UK government forecasts that the UK's economic growth rate will record -11.3% this year, marking the largest decline in over 300 years, and that the government's borrowing this year will reach a peacetime record high of ?394 billion (approximately 583 trillion KRW). Rishi Sunak, the UK Chancellor of the Exchequer, expressed concerns about the increase in government debt, rising unemployment, and uncertainties stemming from Brexit (the UK's withdrawal from the European Union), stating that the economic emergency caused by the novel coronavirus infection (COVID-19) is "just beginning."

According to the daily newspaper The Guardian and others on the 25th (local time), Chancellor Sunak unveiled an annual fiscal spending plan in the House of Commons that prioritizes allocating ?18 billion for COVID-19 response measures. The UK government expects the GDP contraction rate to reach 11.3% this year, with GDP growth of 5.5% next year and 6.6% in 2022.

Chancellor Sunak projected that 2.6 million people will be unemployed by next summer due to the impact of COVID-19. He stated that the UK has not yet emerged from the health emergency caused by COVID-19 and that "economic damage will persist for a long time," adding that "the economic size in 2025 will be 3% smaller than what was projected in the budget plan last March."

Sunak particularly forecasted that the UK government's borrowing this year will reach ?394 billion, which is about 19% of GDP. He acknowledged that the current state of government finances is unsustainable and made it clear that he has the responsibility to address this issue. In light of this, the UK government has decided to reduce government spending plans by more than ?100 billion for 2021-2022.

Chancellor Sunak stated that government spending will focus on three priorities: protecting people's lives and livelihoods, public services, and reducing regional disparities and expanding opportunities through infrastructure investment. First, ?18 billion will be allocated next year primarily for purchasing personal protective equipment (PPE), testing, and vaccines. Additionally, ?4.3 billion will be used to support job seekers. To secure funds, public sector wages will be frozen next year, but wages for more than one million doctors and nurses in the National Health Service (NHS) will be increased.

Furthermore, considering the current financial difficulties, Sunak announced that the overseas aid budget will be limited to 0.5% of GDP instead of the 0.7% pledged during the general election. The UK government plans to restore the overseas aid budget to 0.7% of GDP when fiscal conditions allow. Regarding infrastructure investment, ?100 billion will be invested next year.

This content was produced with the assistance of AI translation services.