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UK general government gross debt rises during pandemic

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·Business Reporter, Yahoo Finance UK
·2-min read
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The UK's gross debt as a percentage of GDP sat eighth highest across the EU, with Greece, Italy, Portugal, Spain, and France making up the top five. Photo: Vuk Valcic/SOPA/LightRocket via Getty
The UK's gross debt as a percentage of GDP sat eighth highest across the EU, with Greece, Italy, Portugal, Spain, and France making up the top five. Photo: Vuk Valcic/SOPA/LightRocket via Getty

The UK’s general government gross debt stood at £2.3tn ($2.89tn) at the end of last year, equivalent to 102.8% of GDP.

However, this was 34.5 percentage points lower than the average debt of the G7 member states.

The UK general government consists of two sub-sectors — central government and local government.

Debt represents the cumulative amount the general government sector owes to organisations in other UK sectors and overseas institutions, which is largely a result of government financial liabilities on the bonds (gilts) and Treasury bills it has issued.

According to the Office for National Statistics (ONS) on Friday, UK debt as a percentage of GDP has tripled since 2001.

At the end of the fourth quarter, Britain’s gross debt as a percentage of GDP sat eighth highest across the EU, with Greece, Italy, Portugal, Spain, and France making up the top five. Belgium and Cyprus followed behind in sixth and seventh.

Read more: UK borrowing jumps £347bn amid COVID pressures

The data also revealed that UK debt rose more than the EU average during the COVID-19 pandemic.

Meanwhile, the government deficit was £187.4bn in 2021, 8.2% of GDP and 0.3 percentage points lower than the average deficit of G7 member states.

Deficit, or net borrowing, measures the gap between total revenue and total spending. A positive value indicates borrowing while a negative value indicates a surplus.

It comes as the UK borrowed more than expected in March and has overshot its own watchdog's target by almost 20%.

In March the public sector borrowed £18.1bn — the second-highest March borrowing figures since 1993, but £8.8bn less than March 2021.

Watch: As UK debt piles up, just how to pay it off?

UK public-sector net borrowing, excluding state-owned banks, totalled £151.8bn in the 2021/22 financial year.

Last month, the Office for Budget Responsibility said it expected borrowing in 2021/22 to be £127.8bn, around 20% less.

The ONS said this was the third-highest financial year borrowing since records began in 1947, but less than half of the £317.6bn borrowed in the same period last year, amid the COVID pandemic.

Watch: How to prevent getting into debt

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