Public sector borrowing has hit more than £2 trillion for the first time in history as ministers invest billions of pounds to support the economy through the pandemic, new figures have revealed.
The Office for National Statistics (ONS) said official bodies borrowed £26.7 billion in July, the fourth highest amount of any month since records began in 1993.
It pushed debt to around £2,004 billion for the first time ever, and means that the public sector debt is higher than gross domestic product (GDP) – the value of everything produced in the UK in a year.
Debt reached 100.5% of GDP at the end of July, the first time it had risen above 100% since 1961, the ONS experts said.
It marks a £227.6 billion rise since this time last year, according to the figures.
However, the official figures have been unusually inaccurate recently, as statisticians and economists try to figure out how to account for the pandemic.
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.
If it remains unrevised, the latest data means that the public sector borrowed £28.3 billion more last month than in July 2019, when it was actually paying off some of its debts.
The UK’s debt pile has now hit £2 trillion, just days after Apple became the most valuable listed company in US history at 2 trillion dollars, or around £1.5 trillion.
Alison Ring, from the Institute of Chartered Accountants in England and Wales, said: “The positive news for the Government is that despite debt reaching £2 trillion, low interest rates have reduced its cost and its growth is slowing as the exceptional support measures to deal with the pandemic are withdrawn and furloughed employees return to work.
“The big question is how much permanent damage is being done to the economy, with accelerating job losses a concerning sign as we approach the autumn. How quickly debt continues to grow will also depend on any additional support that the Government might provide to sectors that are still struggling.”
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.”
Speaking on Times Radio, Transport Secretary Grant Shapps said the debt is not “out of line” when compared to many other countries around the world.
“France, for example, had 100% GDP as their debt level and that was before coronavirus. It will be much higher now. Other countries like, I think, Japan has well over 200%, so it’s not internationally particularly out of whack.
“But clearly we have had to do a heck of a lot of things to try to ensure that the British economy, which is in recession, didn’t go into a much deeper recession, losing far more jobs and that involved adjustments we would (make) in a war, spending a lot of money to protect livelihoods, and I don’t think anyone would ever regret us having done the right thing at the right time.”