UK state debt rose to levels not witnessed for more than 60 years in May despite lower-than-expected government borrowing, according to official figures. The data, which comes only two weeks before the general election, underscores the financial challenge facing the next government, with Labour and the Conservatives pledging to cut debt. The Office for National Statistics (ONS) found that public sector net debt as a proportion of UK GDP (gross domestic product) rose to 99.8 per cent for the month. It said this marks the highest reading since March 1961. In the run-up to the election, both the Labour and the Conservative parties have said they will meet a fiscal rule to reduce the debt-to-GDP ratio over the next five years.
British Prime Minister Rishi Sunak promised to reduce debt as one of his five pledges at the start of 2023. This came as the statistics body also revealed that public sector net borrowing hit £15 billion (£19 billion) for the month. Initial data found that public sector borrowing—the difference between government spending and income—was £0.8 billion higher in the same month a year earlier. It was also the third-highest May since monthly records began in 1993. Nevertheless, this was £0.6 billion below forecasts from the Office for Budget Responsibility (OBR), the government’s official forecaster, and was less than economists had predicted. The central government had receipts – the money it receives, predominantly through taxes – of £76.8 billion for the month.
This represented a £1 billion increase after receiving more through income tax, corporation tax, and VAT (value-added tax). Meanwhile, government spending was recorded as £91.6 billion for May, up £2.8 billion from the same month a year earlier. The increase was partly linked to a £2.2 billion rise in social benefits following the inflation-linked increase in benefit payments. Departmental spending on goods and services was also higher after inflationary pressure on running costs. (dpa/NAN)
