Public sector debt surged to over £ 2 trillion for the first time in history as the government was forced to borrow cash to keep UK plc alive during the coronavirus crisis.
According to the latest data released by the Office of National Statistics, ministers borrowed £ 26.7 billion in July alone.
The ONS said borrowing last month was £ 28.3 billion more than at the same time last year when public finances were actually in surplus.
The borrowing for July is also the fourth highest since records began in 1993 as the government continues to throw billions of pounds on the economy to try to rebound.
The latest public sector debt estimate came after data released earlier this month showed the UK economy was officially in recession.
The Bureau of National Statistics announced today that public sector debt has exceeded £ 2 trillion for the first time
Chancellor Rishi Sunak said the coronavirus crisis had placed "significant strain" on UK finances.
Debt, expressed as a percentage of GDP, is now at the level last seen in the UK in the 1960s
The ONS data showed that public sector debt is now valued at £ 2.004 trillion.
This is the first time the number has ever been seen to surpass £ 2 trillion, and about £ 227.6 billion more than a year ago.
According to a consensus from Pantheon Macroeconomics, analysts had forecast borrowing to reach £ 28.6 billion in June.
In late July, it marked the first time Britain's debt was worth 100.5 percent more than the total value of its gross domestic product since 1961, according to the ONS.
The 100.5 percent figure represents a 20 percent increase over the level of indebtedness expressed as a percentage of GDP – the value of all products produced in the UK in a year – compared to the same point last year.
Chancellor Rishi Sunak said, “This crisis has put a significant strain on public finances as we have seen a blow to our economy and taken steps to support millions of jobs, businesses and livelihoods.
“Without this support it would have been a lot worse.
& # 39; Today's numbers are a clear reminder that over time we will have to put our public finances back on a sustainable footing, which will require difficult decisions.
& # 39; So we are now taking action to support the growth and jobs that are paid for our public services by helping businesses reopen safely and by protecting, assisting and creating jobs through our Plan for Jobs to ensure hope that no one remains without them. & # 39;
Borrowing in the first four months of the current financial year (April to July) is estimated at £ 150.5 billion.
That is £ 128.4 billion more than the same period last year and the highest borrowing in April-July since records began in 1993. One borrowing was recorded every month from April-July.
However, the latest numbers include a health warning as official public sector borrowing and debt figures have been unusually inaccurate in recent months due to the volatility caused by the coronavirus crisis.
A few weeks ago, the ONS cut borrowing by £ 6bn to £ 29.5bn in June as tax and social security contributions rose faster than expected.
Data released earlier this month showed that the UK had suffered the greatest economic damage from the coronavirus of any major economy, after GDP fell more than a fifth at the height of the outbreak.
UK plc was down a shocking 20.4 percent in the three months to June. This was the sharpest decline in modern history, with record declines in construction, services, and production.
The UK is officially in recession for the first time since the credit crunch – defined as two consecutive quarters in which the economy contracts.
ONS data released earlier this month showed the UK was hit harder than any other G7 economy in the first half of the year – only Spain suffered a worse downturn
Official figures showed that UK plc is down 20.4 percent in the three months ended June this year
The monthly GDP figures compiled by the ONS show that the economy has recovered since April. Percentages cannot be added to give a total change over the period
The economy was down 2.2 percent in the first three months of the year and is now smaller than it has been since 2003.
The recession – the deepest in 100 years – is harder than in any other G7 country, only Spain is harder hit.
However, there was a glimmer of hope when the GDP figure fell 8.7 percent for a month in June as lockdown restrictions eased.
Mr Sunak had responded to confirmation that the UK was in recession by saying "hard times are here" as he warned that many more jobs would be lost.
ONS data, also released today, showed online sales declined seven percent in July compared to June as more shoppers were confident of returning to the high street.
The new loan numbers came after ONS data showed one in eight workers is still on vacation before the government's loyalty program ends.
The ONS announced that its most recent 14-day survey of the impact of the coronavirus on UK businesses found that 12 percent of the total workforce is still on leave and the economy appears to still be heavily reliant on government support.
Mr. Sunak said the vacation program will be completed in late October and support will be reduced from next month.
The GDP numbers show the UK has entered a technical recession – with two consecutive quarters of contraction. The Bank of England predicts that the downturn will be the worst in a hundred years (graph in picture).
The latest company survey by the Office for National Statistics found that one in ten companies has a “moderate” risk of bankruptcy
According to the ONS, around 12 percent of the workforce is still on vacation
Meanwhile, one in ten British companies has stated that they are at risk of default due to the coronavirus crisis. 40 percent state that they have cash reserves of less than six months at the bank.
Around 10 percent of companies have estimated that they have a "moderate" risk of not being able to pay their bills in the near future.
Only one percent of companies said their risk of bankruptcy was "severe", but almost half of all companies – 45 percent – said they had at least a low risk of bankruptcy.
Almost a third (32 percent) stated that there was no risk of bankruptcy.
Around 41 percent of companies now have cash reserves worth less than six months, while four percent say they have no cash reserves.
(tagsToTranslate) Dailymail (t) Nachrichten (t) Coronavirus