UK Government Debt Surges Due to COVID-19... Reaches 99% of GDP

Government Borrowing Hits 47 Trillion Won... Largest Since Statistics Began in 1993

[Image source=Yonhap News]

[Asia Economy Reporter Onyu Lim] Due to the spread of the novel coronavirus infection (COVID-19), the UK government's debt has rapidly increased. This is because income has decreased while expenditures for household and business support have occurred.

According to the BBC on the 22nd (local time), the UK Office for National Statistics (ONS) announced that government borrowing in November amounted to ?31.6 billion (approximately 47 trillion KRW). This is the highest figure recorded for November since statistics began in 1993. Considering all months, it is the third largest amount.

Since the start of this fiscal year (April), the UK government's borrowing over eight months has reached ?241 billion (approximately 359 trillion KRW), an increase of ?190 billion (approximately 283 trillion KRW) compared to the same period last year.

The UK Office for Budget Responsibility (OBR) projected that the government's net borrowing for this fiscal year will expand to ?372 billion (approximately 554 trillion KRW). This corresponds to 19% of the Gross Domestic Product (GDP), the highest level since World War II.

The ONS explained that the public debt-to-GDP ratio as of November was 99.5%, the highest since 1962.

UK Chancellor of the Exchequer Rishi Sunak stated that although not immediately, he will respond to the large fiscal deficit. Chancellor Sunak said, "When our economy recovers, it is right to take the necessary measures to make finances more sustainable," adding, "That way, we can respond to future crises as we did this year."

In this regard, the International Monetary Fund (IMF) indicated that the UK may need to raise taxes after the pandemic.

In a separate announcement on the same day, the ONS reported that the Gross Domestic Product (GDP) for the third quarter (July to September) surged by 16% compared to the previous quarter. The preliminary GDP growth rate announced last month was 15.5%. Despite the sharp increase in GDP in the third quarter, it still has not recovered from the 18.8% decline in the second quarter. As of the third quarter, the UK's GDP remains 8.6% smaller than at the end of last year.

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