UK government debt exceeds £2trn for first time

UK government debt exceeded £2trn in July for the first time as spending rose due to the coronavirus pandemic, according to figures released on Friday by the Office for National Statistics.

Debt at the end of July stood at £2.004bn, up £227.6bn compared to the same month last year. This debt represents 100.5% of gross domestic product, an increase of 20.4 percentage points compared with this time last year and the first time it has been above 100% since 1961.

Borrowing in July was £26.7bn, up £28.3bn on the year and the fourth highest borrowing in any month since records began in 1993.

Borrowing in April to July was £150.5bn, up £128.4bn compared to the same period last year and marking the highest borrowing in any April to July period on record. The figure is close to the £158.3bn deficit for the whole of 2009/10, which was previously the largest cash deficit in history. Capital Economics economist Ruth Gregory said this reflects "the extraordinary fiscal support the government has put in place to see the economy through the crisis".

The hit to July’s public finances came from higher government spending and a sharp fall in tax receipts.

Chancellor Rishi Sunak said: "This crisis has put the public finances under significant strain as we have seen a hit to our economy and taken action to support millions of jobs, businesses and livelihoods.

"Without that support things would have been far worse.

"Today's figures are a stark reminder that we must return our public finances to a sustainable footing over time, which will require taking difficult decisions.

"It is also why we are taking action now to support the growth and jobs which pay for our public services, by helping businesses to reopen safely and, through our plan for jobs, protecting, supporting and creating jobs to ensure that nobody is left without hope."