Government Borrowing Set to Jump

GOVERNMENT BORROWING - Public sector net debt is forecast to rise by £125bn or 4.6% of GDP, as the government embarks on the largest spending increase since 1992, according to the Office for Budget Responsibility.

In 2005 the UK “current budget deficit” was less than £20 billion. But then came the worldwide financial crisis of 2008 and subsequent recession. The budget deficit skyrocketed to £50 billion in 2009 and £103 billion in 2010. In the subsequent recovery, the deficit has steadily declined, down to £1.9 billion in 2018. At the end of March 2019 the “current budget deficit” was a surplus of £19 billion.

In terms of Gross Domestic Product, the UK “current budget deficit” in 2005 was less than 2 per cent of GDP and declined to about 0.6 per cent GDP in 2007 and 2008. In the Great Recession, the deficit ballooned, to 6.9 per cent of GDP in 2010. Since then the deficit has steadily declined, to less than one per cent GDP in 2017. At the end of March 2019 the “current budget deficit” was a surplus of 0.9 per cent of GDP. All that will change however as tax revenues fall.

The deficit, the gap between the countries expenditure and tax revenue is the deficit. The debt is the cumulative amount of money owing.

Public Debt in the United Kingdom is principally the debt of the central government.

In 2005 the UK National Debt was less than £0.5 trillion. But then came the worldwide financial crisis of 2008 and subsequent recession. The National Debt increased rapidly and went over £1 trillion in 2011 and over £1.5 trillion in 2016. At the end of March 2019, the National Debt was £1.80 trillion.
In terms of Gross Domestic Product, the UK National Debt in 2005 was about 38 per cent of GDP.

But in the last ten years, in the wake of the Crash of 2008 and subsequent recession, the National has doubled to over 80 per cent GDP but is levelling out as a per cent of GDP. At the end of March 2019, the National Debt was 84.6 per cent of GDP.

We may well see taxes going up post pandemic. 

ABC Note: The Office for Budget Responsibility (OBR) is a non-departmental public body funded by the UK Treasury, that the UK government established to provide independent economic forecasts and independent analysis of the public finances.

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