UK debt now larger than size of whole economy (2024)

FAQs

UK debt now larger than size of whole economy? ›

The UK's debt is now worth more than its economy after the government borrowed a record amount in May. The £55.2bn figure was nine times higher than in May last year and the highest since records began in 1993.

HIGH DEBT LEVELS

Britain's public debt levels, like those of many other countries, rocketed due to the massive costs of the COVID pandemic and the energy price surge.

1. Main points. UK general government gross debt was £2,654.3 billion at the end of Quarter 3 (July to Sept) 2023, equivalent to 100.0% of gross domestic product (GDP). UK general government deficit (or net borrowing) was £39.2 billion in Quarter 3 2023, equivalent to 5.8% of GDP.

This was due to extra government borrowing, largely caused by increased spending on health, education, and social security benefits.

Higher taxes mean people have less money to spend, so businesses make less profit, which can be bad for jobs and wages. Lower profits also mean companies pay less tax. So, governments often borrow to boost the economy.

At the top is Japan, whose national debt has remained above 100% of its GDP for two decades, reaching 255% in 2023.

Britain's tax burden is set to hit its highest since the Second World War while public debt is close to 100% of gross domestic product, up from 35% just over 15 years ago due to huge spending to support the economy during the global financial crisis, the COVID pandemic and the 2022 surge in energy prices.

Who owns UK Debt? The majority of UK debt used to be held by the UK private sector, in particular, UK insurance and pension funds. In recent years, the Bank of England has bought gilts taking its holding to 25% of UK public sector debt. Overseas investors own about 28% of UK gilts (2022).

Around £2.34bn is owed to the UK by 24 nations – including Sudan, Somalia and Zimbabwe – £825m of which is interest, UK Export Finance, which insures British business dealings abroad, has disclosed following a freedom of information request.

Does America still owe Britain money? ›

Top 10 territories that own the most U.S. debt

In total, other territories hold about $7.4 trillion in U.S. debt. Japan owns the most at $1.1 trillion, followed by China, with $859 billion, and the United Kingdom at $668 billion.

The public owes 74 percent of the current federal debt. Intragovernmental debt accounts for 26 percent or $5.9 trillion. The public includes foreign investors and foreign governments. These two groups account for 30 percent of the debt.

Including both private and public debt holders, the top three December 2020 national holders of American public debt are Japan ($1.2 trillion or 17.7%), China ($1.1 trillion or 15.2%), and the United Kingdom ($0.4 trillion or 6.2%).

The federal government needs to borrow money to pay its bills when its ongoing spending activities and investments cannot be funded by federal revenues alone.

One of the most common questions asked is, who owns UK National Debt? Often people assume that UK government debt is owned by foreign investors. However, foreign investors only hold about 25-30% of UK government debt. The rest is held by the UK private sector (pension funds, insurance companies e.t.c).

How the Federal Government Borrows Money. The federal government borrows money from the public by issuing securities—bills, notes, and bonds—through the Treasury. Treasury securities are attractive to investors because they are: Backed by the full faith and credit of the United States government.

A record 6.7 million people in Britain are in financial difficulty, a campaign group has claimed, as the cost of living crisis pushes more households into debt.

There never was any “WWII debt” owed by the United Kingdom to the United States. Post-war loans to the United Kingdom by the United States and Canada were paid off in 2006. Did the US make the UK pay back its World War 2 loans in order to break up the British Empire?