UK public sector debt goes above £2 TRILLION for the first time in history as ministers borrowed £27 billion in July alone because of coronavirus crisis
- Statistics show public sector debt is now above £2 trillion for the first time ever
- Office for National Statistics said borrowing in July was just shy of £30 billion
- Chancellor Rishi Sunak said coronavirus put UK plc ‘under significant strain’
- Comes after one in 10 firms said they were facing ‘moderate’ risk of insolvency
Public sector debt has now gone above £2 trillion for the first time in history as the Government was forced to borrow cash to keep UK plc afloat during the coronavirus crisis.
Ministers borrowed £26.7 billion in July alone, according to the latest data published by the Office for National Statistics.
The ONS said borrowing for last month was £28.3 billion more than the same time last year.
It is also the fourth highest since records began in 1993, as the Government continues to throw billions of pounds at the economy to try to help it recover.
Chancellor Rishi Sunak said the coronavirus crisis had put the UK’s finances under ‘significant strain’
The Office for National Statistics today revealed that public sector debt is now above £2 trillion for the first time ever
Debt expressed as a percentage of GDP is now at levels last seen in the UK in the 1960s
The ONS data revealed that public sector debt is now estimated at £2.004 trillion.
That represents the first time ever recorded that the number has gone above £2 trillion and it is approximately £227.6 billion more than was recorded a year ago.
Analysts had forecast borrowing would reach £28.6 billion in June, according to a consensus by Pantheon Macroeconomics.
The end of July marked the first time that the UK’s debt was more than its gross domestic product, at 100.5 per cent, since 1961, the ONS said.
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.’
However, the latest numbers do come with a health warning because official figures setting out public sector borrowing and debt levels have been unusually inaccurate in recent months because of the volatility caused by the coronavirus crisis.
Just weeks ago the ONS revised down June’s borrowing figure by £6 billion to £29.5 billion, as tax and National Insurance contributions rose more than expected.
ONS data also published today showed online sales fell seven per cent in July compared with June, as more shoppers felt confident returning to the high street.
The new borrowing numbers came after ONS data showed one in eight workers are still on furlough ahead of the winding down of the Government’s job retention programme.
The ONS said that its latest fortnightly survey into the impact of coronavirus on UK firms had shown that 12 per cent of the overall workforce is still furloughed.
Mr Sunak has said the scheme will close at the end of October with support starting to be reduced from next month.
Meanwhile, one in 10 UK firms have said they are at risk of becoming insolvent because of the coronavirus crisis with 40 per cent admitting they have less than six months worth of cash reserves in the bank.
The Office for National Statistics’ latest business survey showed one in ten firms have estimated they are facing a ‘moderate’ risk of insolvency
Some 12 per cent of the workforce are still on furlough, according to the data published by the ONS
Some 10 per cent of firms have estimated they are at ‘moderate’ risk of being unable to pay their bills in the near future.
Only one per cent of businesses said their risk of insolvency was ‘severe’ but almost half of all companies – 45 per cent – said they faced at least a low risk of going bust.
Just shy of one third (32 per cent) said there was no risk of them becoming insolvent.
Meanwhile, some 41 per cent of businesses have less than six months worth of cash reserves while four per cent said they had zero cash reserves.