UK Public Debt Highest Since 1960s; Budget Deficit Remains Below Estimate

The UK public sector net debt rose to its highest level since early 1960s, while public sector borrowing remained below the official estimate, the Office for National Statistics reported Friday.

Public sector net debt excluding public sector banks was estimated at 99.8 percent of gross domestic product at the end of May. This was 3.7 percentage points more than at the end of May 2023, and remained the highest since early 1960s.

Data showed that in the financial year to May, borrowing totalled GBP 33.5 billion, which was GBP 0.4 billion more than in the same two-month period a year earlier.

Nonetheless, the deficit was less than the GBP 35.0 billion forecast by the Office for Budget Responsibility.

In May alone, public sector net borrowing rose by GBP 0.8 billion from the previous year to GBP 15.0 billion. This was the third highest May borrowing since monthly records began in 1993.

Central government’s receipts increased GBP 1.0 billion annually and expenditure grew GBP 2.8 billion. Interest payable on debt was GBP 8.0 billion, which was the second highest May payable since monthly records began in 1997.

Capital Economics’ economist Alex Kerr said public finances figures delivered some better news on the fiscal position after the recent run of worse-than-expected outturns.

However, better news does not mask fiscal challenges waiting the new government, Kerr noted.

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