The data comes after Prime Minister Keir Starmer warned Britons about a “fiscal hole left by the Conservatives” of around $28 billion. The Labour leader predicted “painful decisions.”
The debt of the United Kingdom hit 100% of gross domestic product (GDP), the highest level since 1960. The figure climbed 4.3 percentage points in the year to August and adds challenges for Labour Chancellor of the Exchequer Rachel Reeves.
This means that the country’s national debt reached 100% of annual economic output. The figures were released on Friday by the Office for National Statistics. Government borrowing – the difference between public sector spending and revenue – was £13.7 billion, an increase of £3.3 billion compared with the same month last year, sThis is the third-highest deficit recorded for a month of August since monthly records began in January 1993.
Darren Jones, chief secretary to the Treasury, said the figures showed The difficult state of public finances inherited from the conservativeswhich would force Labour to make “difficult decisions” to rebuild the economy. “When we came into office, we inherited an economy that didn’t work for working people. Today’s data shows the highest debt on record in August, outside of the pandemic. Debt is 100% of GDP, the highest level since the 1960s,” he said.
The context in which the data was known
The figures came amid mounting pressure on the government to ease tax increases and spending cuts planned for the October 30 budget, after Keir Starmer warned the public of “painful” decisions ahead after uncovering what Labour called a £22 billion ($28 billion) hole in the public finances.
Reeves announced in August that he would scrap winter fuel payments for most pensioners, suspend plans to reform social care and cancel investment in roads, rail and hospitals as the first stage of a plan to reduce borrowing.
However, concerns are growing within the Labour Party that the downbeat tone is damaging the government, while economists warn that measures that affect consumer confidence could hurt growth and jobs.
Keir Starmer (3).JPG
Reuters
Figures released on Friday by data company GfK showed consumer confidence fell to its lowest level since March, blamed on Mr Reeves’ plans to scrap winter fuel payments for all but the poorest households and warnings of tough choices ahead.
The latest snapshot of public finances from the ONS showed that while tax revenues grew strongly in August, this was offset by higher spending, largely caused by increased benefits and higher spending on public services due to higher operating costs and wages. Although official figures had put the debt-to-GDP ratio above 100% last year, the ONS said revisions meant this was the first time since 1961 that the reading matched the size of the economy.
Source: Ambito
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