Britain’s Debt Levels Exceed 100% of GDP
Data released by the British National Statistics Office (20.06.2020 ) said that public borrowing in the United Kingdom was greater than the entire economy of the country in May.
The bank indicated that this matter is happening for the first time since the fiscal year that ended in March 1963.
The UK ended May with public sector borrowing at 100.9% of GDP.
The UK posted a budget deficit of 54.5 billion pounds in May of 2020 compared to a gap of 5 billion pounds in the previous year and higher than expectations, which stood at 47.3 billion pounds.
This is a new record deficit due to the introduction of public health measures and new government policies to support companies and individuals during the spread of the Coruna virus.
Excluding publicly owned banks, the value of borrowing was 55.2 billion pounds, nearly nine times what it was in May 2019, which is also the highest borrowing ever.
The value of borrowing between April and May 2020 was estimated at 103.7 billion pounds, an increase of 80 billion pounds over the same period last year.
Earlier in the day, data released by the British Statistics Office showed that the retail sales index recorded 12.0% in May, higher than expectations, which stood at 5.7% and better than the previous reading of -18.1%. On an annual basis, retail sales recorded -13.1%, while it was expected to record -17.1%.
Yesterday the Bank of England kept interest rates at a record low and will boost the £ 100 billion bond-buying program to help guide the UK economy through the Corona virus crisis.
At its June meeting, the Bank of England’s Monetary Policy Committee voted unanimously to keep the key interest rate at a record low of 0.1 percent, and voted 8-1 to increase its stimulus package.
Bank of England chief economist Andy Haldane was the only member of the Monetary Policy Committee that voted against increased stimulus measures.
The payment will raise £ 100bn of the bank’s total inventory of asset purchases to £ 745bn. For its part, the Monetary Policy Committee announced that recent data indicates that the decline in global GDP and the UK in the second quarter “will be less severe” than expected in the May meeting.
Although it is stronger than expected, it is hard to clearly conclude from this regarding recovery after that. “There is a risk that unemployment will rise and persist in the United Kingdom,” the commission said in its report.
“Even with some restrictions associated with economic growth easing at the level of the economy, a degree of precautionary behavior by households and companies is likely to continue. The Monetary Policy Committee added that the economy, especially the labor market, will take some time to recover towards its previous path.
The Bank of England lowered its base rate to 0.1 per cent, and launched an asset purchase program of 200 billion pounds in March, while it devastated the British economic pandemic. But the central bank has already spent much of this additional firepower as it absorbs a lot of Covid-19 government borrowing.
Earlier this month, the Organization for Economic Cooperation and Development said that Britain could suffer a major blow to trade and jobs if it was unable to reach an agreement after Britain’s exit from the European Union by the end of 2020 or failed to extend the current stage of Britain’s exit from the European Union.
The Organization for Economic Co-operation and Development said the risks related to Britain’s future relationship with the European Union added to the uncertainty over the duration of Coffid-19’s restrictions on the economy.