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UK national debt exceeds £2 trillion for the first time

The UK national debt has exceeded £2 trillion for the first time ever, according to the latest public sector finances report from the Office for National Statistics (ONS).

Figures released today (August 21) show that public sector net debt (PSND) was £2,004.0 billion at the end of July, as the true financial impact of the coronavirus pandemic started to be realised.

PSND is now £227.6 billion higher than it was at the same time last year, with the Government having borrowed a record £150.5 billion since April 2020 alone.

That’s £128.4 billion more than in the three months from April 2019.

PSND is also now 100.5 per cent of GDP, an increase of 20.4 per cent compared with 2019, and marks the first time debt has exceeded annual output since March 1961.

Borrowing in the month of July is estimated to have been £26.7 billion. That’s £28.3 billion more than in July 2019, when the Government actually earned more than it spent (a surplus).

While July’s £26.7 billion is still the fourth highest borrowing in any month on record, it is an improvement on June, where the figure was £29.5 billion.

Both of those figures are also dwarfed by monthly borrowing in April and May, which was £63.5 billion and £62.7 billion respectively.

A combination of falling tax receipts and extraordinary policy interventions such as the Coronavirus Jobs Retention Scheme (CJRS) mean that borrowing could be as high as £322 billion this year, according to the Office for Budget Responsibility (OBR).

That would break all deficit records and make 2020 one of the most expensive years in modern history for the Exchequer.

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 of jobs which pay for public services, by helping businesses to reopen safely and, through our Plan for Jobs, protecting, supporting and creating jobs to ensure nobody is left without hope.”