The cost of the coronavirus pandemic is mounting for the UK government, as Britain’s national debt approaches £2tn ($2.47tn) for the first time.
Projections from the Office for Budget Responsibility (OBR), the UK’s finance watchdog, show the milestone will be reached next month, putting the debt at more than 100% of national income for the first time since the end of World War Two.
It took over 300 years for the UK to reach a national debt of £1tn, however it has taken only another decade to reach £2tn, according to a report published by the Daily Mail.
Around the world, countries are reckoning with the spiralling costs of dealing with the COVID-19 pandemic, triggering a surge in national debt.
When the government released information on its policy decisions regarding coronavirus in March, the OBR said that “the government has proposed the largest sustained fiscal loosening since the pre-election Budget of March 1992.”
Alongside this, the Bank of England warned that Britain faces the deepest recession for more than 300 years. Borrowing this year is set to hit an unprecedented £300bn.
The Organisation for Economic Co-operation and Development (OECD) has warned government borrowing will “come back to haunt us.” Although interest rates have made debt cheap in recent months, future increases in borrowing costs will push up the bill for servicing that debt. This will mean less money for frontline services that have proved crucial during the pandemic.
This comes amid efforts by chancellor Rishi Sunak to prevent job losses with an extensive furlough scheme. This was recently extended to end in October and is set to be phased out.
Some 8.4 million workers currently have had 80% of their salaries paid for by the government under the scheme, which was originally intended to last until the end of July.