Friday 20 / September / 2024
London: UK state debt now equals the country's annual economic output, data showed on Friday, with the government warning that tough choices needed to be made.
The British Labour Party, elected in early July, says it needs to fill a £22-billion (€26-billion, $29-billion) "black hole" in public finances left behind by the previous Conservative administration.
What we know about the UK finances
The UK's Office for National Statistics said public sector net debt "was provisionally estimated at 100% of gross domestic product at the end of August."
The Labour government was elected vowing to rebuild the economy after it inherited what it said were the worst economic circumstances since the Second World War.
Brexit, the COVID-19 pandemic and the impact of Russia's war in Ukraine have all taken their toll.
While it had already warned that there would be a grim economic legacy ahead of the election, the party said the situation was worse than it had thought.
"Debt is 100% of GDP, the highest level since the 1960s," Chief Secretary to the Treasury Darren Jones said in a statement.
"Because of the £22 billion black hole in our public finances we have inherited this year alone, we are now taking the tough decisions now to fix the foundations of our economy," he added.
What is the government expected to do?
Prime Minister Keir Starmer has warned that the budget announcement on October 30 will be "painful", with tax rises and spending cuts expected.
Chancellor of the Exchequer Rachel Reeves, the UK finance minister, has also warned of tough decisions ahead of her announcement about the country's fiscal plans to parliament at the end of next month.
Reeves has said she will remove a £200 annual winter fuel subsidy from 10 million pensioners. She also warned that taxes were likely to rise by more than had been judged necessary just weeks before the election.
In the longer term, a government watchdog last week forecast that UK state debt could almost treble over the next 50 years. It cited an aging population and climate change as the main reasons.
