It took the British government more than three centuries to rack up debts of £1trillion. That milestone was reached in 2010, in the wake of the financial crisis.
It took just ten more years for our debts to hit £2trillion.
They now stand just shy of £2.9trillion – and will hit £3trillion either this fiscal year or next.
So that’s another trillion racked up in less than a decade.
Yes, there’s the impact of inflation. And the triple-whammy of the financial crisis, the Covid-19 pandemic and the energy shock after the invasion of Ukraine, all of which pushed the debt higher as the government borrowed to support households and businesses.
But as the Office for Budget Responsibility warned in a recent report highlighting the parlous state of the nation’s finances, successive governments have failed to take the action required to bring the debt back under control in the wake of those crises.
Bond markets are looking twitchy as gilt yields stride ahead of all G7 peers
Planned tax rises have been ‘reversed’, notes the OBR, ‘and more significantly planned spending reductions have been abandoned’.
That the OBR pointed this out so soon after Labour watered down welfare cuts is telling.
Political failings mean the national debt remains stuck at close to 100 per cent of national income – the highest level since the 1960s – with little sign of improvement in sight.
And the government’s annual borrowing bill has hovered around 5 per cent of GDP a year since the pandemic – levels only previously seen during recession or war.
The surge in interest payments on debt is ringing alarm bells for the UK
Public sector borrowing hit £20.7billion last month, higher than the £17.6billion forecast
This is a major headache for Rachel Reeves ahead of the Budget this autumn.
And that spells yet more pain for households and businesses – because however the Chancellor spins it, another round of tax rises are coming. They will be big. And they will be painful.
This is because, far from being a ‘beacon of stability’ in an uncertain world, as Downing Street would have us believe, Britain is at the mercy of the bond markets.
One only has to look back at the Liz Truss debacle to know that twitchy bond markets matter.
And twitchy they are.
To such an extent that UK gilt yields – a key measure of how much it costs the British government to borrow – are the highest in the G7.
In fact, the UK has the third-highest borrowing costs of any advanced economy after New Zealand and Iceland.
This is because international investors look at Britain – with its soaring debts and lack of political will to do anything about it – and do not like what they see.
So they charge the UK government more to lend it money than almost every other similar economy in the world.
To understand what that means one only has to look at the today’s figures from the Office for National Statistics that show the UK paid £16.4billion of interest on the national debt in June alone.
This was £8.4billion more than in the same month last year and the second highest June on record, amounting to nearly £550million a day and more than £22million an hour.
So we are now in a situation where we are forecast to spend £111billion this year servicing the national debt – and just £62.2billion on defence.
With the economy slowing, fears are mounting that the fiscal situation is getting worse not better.
The scene is set for another punishing Budget this autumn.
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This article was originally published by a www.dailymail.co.uk . Read the Original article here. .