UK National Debt - A Challenge for Starmer.
Published by Campbell M Gold in Political · Friday 05 Jul 2024
Tags: UK, National, Debt, Challenge, Starmer, Keir, Starmer, Economy, National, Debt, UK, Economy
Tags: UK, National, Debt, Challenge, Starmer, Keir, Starmer, Economy, National, Debt, UK, Economy
National Debt - A Challenge for Starmer
The UK National Debt as a percentage of GDP will be a Challenge for Starmer. Public sector net debt amounted to 88.8% of GDP (Gross Domestic Product) in the UK during the 2023/2024 financial year, rising to 97.6% when the Bank of England deficit is included...
This is the highest debt incurred by a government since the early 1960s. Harold Macmillan led the Conservative Government from 1957 to 1963 and was succeeded by Lord Alec Douglas-Home, who led the Government from 1963 to 1964.
After peaking at 251.7% shortly after the end of WW2, UK government debt gradually fell before a sharp increase occurred again in the late 2000s, which was linked to the global financial crisis and the COVID-19 pandemic.
UK National Debt Not Expected to Start Falling Until 2028/2029
In 2022/2023, the UK's Conservative government expenditure was approximately £1.15 trillion, around 45.3% of GDP. This spending was financed by £1.02 trillion of raised revenue and £1.28 billion of borrowing.
Although the UK government can still borrow money in the future, it also needs to comply with specific fiscal rules, one of which is that national debt should fall within five years.
Recent forecasts suggest that while this is optimistically expected to be the case, it is based on falling government deficits in the next five years. But will it happen? Many commentators seriously doubt it.
Hard Choices Lie Ahead for Starmer's New Labour Government
As winners of the 2024 general election, Labour faces tough economic choices in the coming years. Hitting fiscal targets, such as reducing the national debt, will require a careful and honest balancing of the books, possibly requiring spending cuts or tax rises.
However, Labour has ruled out raising the main government tax sources, Income Tax, National Insurance, and VAT, and is silent on possible spending cuts. With borrowing limits and no tax rises or spending cuts, maintaining, let alone improving, public services will prove a challenging prospect for Sir Kier Starmer's new government.
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