UK government debt exceeds two trillion pounds for first time
Updated 20:33, 22-Aug-2020
The Millennium Bridge in front of St. Paul's Cathedral in London, Britain, August 1, 2020. /Xinhua

The Millennium Bridge in front of St. Paul's Cathedral in London, Britain, August 1, 2020. /Xinhua

Britain's public debt went above two trillion pounds (2.65 trillion U.S. dollars) for the first time in July as the coronavirus pandemic pushed the UK economy deep into recession, official data showed Friday. 

Net debt, excluding public banks, rose to 2.004 trillion pounds, up by nearly 230 billion pounds from July 2019 and equivalent to 100.5 percent of Britain's economic output, its highest since 1961.

Borrowing in the April-July period, the first four months of the financial year, surged to 150.5 billion pounds, almost three times borrowing by the government during the previous financial year as a whole, the Office for National Statistics 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," finance minister Rishi Sunak said in a separate statement. 

Sunak is due to announce his latest plans for the economy in an annual budget speech in the autumn when unemployment is expected to be rising sharply.

His job protection scheme, which has so far cost 35 billion pounds, is due to expire at the end of October and he is facing calls from unions, the opposition Labour Party and many business leaders to come up with alternative forms of support.

"The priority for the chancellor (finance minister) going forward should be to prioritize limiting the depth of the economic crisis, particularly given record low borrowing costs and the risk of a post-furloughing rise in unemployment," Charlie McCurdy, an economist at the Resolution Foundation think tank, said.

Britain's borrowing costs were little changed after Friday's data.

"Only once the recovery is secured should the chancellor turn to tackling the deficit, with tax rises needing to be a key plank of that plan," McCurdy said.

(With input from Reuters)