The UK’s public sector net debt surpassed 100% of gross domestic product in May — for the first time since 1961 — as May borrowing came in higher than expected, the Office for National Statistics said on Wednesday.
Public sector net debt at the end of May, excluding that of state-controlled banks, hit £2.567 trillion, equivalent to 100.1% of GDP.
Public sector net borrowing (PSNB ex) in May 2023 was £20 billion, £10.7 billion more than in May 2022 and the second-highest May borrowing since monthly records began in 1993.
PSNB ex in the financial year to May 2023 was £42.9 billion, £19.6 billion more than in the same two-month period last year and £2.1 billion higher than the £40.8 billion forecast by the Office for Budget Responsibility (OBR).
Martin Beck, chief economic adviser to the EY ITEM Club, said: “We expect this gap to widen as we move through 2023-24. The likelihood that GDP and inflation will be stronger than the OBR expects is positive for tax revenues. However, this will be more than offset by the upward pressures on spending.
“Higher inflation combined with higher short- and long-term interest rates will significantly increase the level of debt interest payments, and borrowing could overshoot the OBR’s forecast by as much as £20bn by the end of the fiscal year.”