The government’s debt has risen to £2 trillion due to Covid-19

This article is from the BBC and it discusses the rise in the UK’s public debt due to the furlough scheme, the Eat Out To Help Out scheme and other programmes the government has set up.

The article starts by mentioning the enormity of our public debt, by stating that £2 trillion is equal to what the UK produces in one whole year(GDP) and that the total debt now of £2.004 trillion is £227.6 billion more than it was this time last year. Certain economists believe this will worsen, and the possibility of the furlough scheme extending provides evidence for this. The writer then says that this is the first time debt has become higher than the GDP since 1960–61.

The borrowing figure(the difference between spending and tax income) in July was £26.7 billion. This is the fourth highest borrowing month since records began in 1993. The article then pulls a quote from Ruth Gregory, a senior UK economist at Capital Economics. She says that this July figure is another push and puts borrowing this year at £150.5 billion. This figure is close to the whole deficit of 158.3 billion for the 2009–10 year during the financial crisis, she states. That means that this year almost surely will be a bigger borrowing year than the year during one of the worst financial crashes ever. This figure shows how much money the government has pumped into the economy to see it through this pandemic.

Then the article quotes Rishi Sunak, the Chancellor, saying that this health emergency put public finances under strain and that this level of borrowing is to support jobs and businesses and that it is necessary. However, the article soothes our worries by saying that the interest rates of the borrowing are low and some extra borrowing will end up in the hands of the Bank Of England. Also, Quantitative Easing is already being executed by the Bank of England to try to stimulate the economy.

Then Carl Emmerson, deputy director of the Institute for Fiscal Studies, is quoted saying that this is not really surprising that the government is in huge debt. Also the article states that the recent tax incomes and contributions from National Insurance in June can ease the suffering, which is a good sign. The writer continues by saying that certain analysts believe the debt will be worse, but there is light at the end of the tunnel. The Treasury is wary of doing much to make the situation worse, so support in the future for ordinary people may be lower than usual and if borrowing continues on this course it will reach the debt levels seen after World War Two. In August, the borrowing is expected to jump due to the Self-Employment Income Support Scheme and the Eat Out to Help Out scheme, but after that, schemes will be wound down, meaning that the situation should get better.

Overall, the article says the immense debt levels we are seeing are due to schemes to help the people and the economy, the future looks fine, one shouldn’t worry and the debt borrowing figures will most likely look better.