UK debt soars to record £1 trillion
Published 24/01/2012 | 10:12
The UK's debt mountain has smashed through the £1 trillion barrier for the first time in history.
The grim milestone, equivalent to some £16,400 per person in the UK, was reached despite a bigger-than-expected fall in borrowing in December as the Government's austerity measures increasingly kick in.
Public-sector borrowing, excluding financial interventions such as bank bailouts, fell £2.2 billion to £13.7 billion in the month. The City had expected it to fall to £14.9 billion. But this was still enough to drive net debt to £1,003.9 billion, or 64.2% of GDP, up from £883 billion a year ago, and its highest since records began in 1993.
A Treasury spokesman said: "That our national debt has reached more than £1 trillion simply shows the unsustainable level of spending this country built up over the past few years, and shows why it is critical for our nation's future that we deal decisively with the deficit.
"Today's figures show that we are making good progress, with borrowing over £11 billion lower than in the same period last year."
It means the UK is one of a small number of countries measuring its debt in trillions rather than billions, including the United States, Italy and Japan.
Central Government spending fell in December while the tax haul rose with the help of last year's rise in VAT to 20% and the levy on banks' balance sheets. But December's fall was partly offset by a £1.3 billion increase in estimates for borrowing between April and November after local Government spending was revised upwards.
However, Chancellor George Osborne is still on track to hit a target set by the Office for Budget Responsibility to reduce borrowing to £127 billion in the financial year. The Government borrowed a total of £103.3 billion between April and December, which is £11.3 billion lower than the previous year.
Vicky Redwood, a UK economist at Capital Economics, said the figure was a reminder of the "enormity of the challenge that still lies ahead to get the public finances back on a sustainable footing". "So far, it has been weaker spending growth helping borrowing to fall, whereas tax receipts are falling short of the fiscal forecasts," she added.
Labour's shadow chief secretary to the Treasury Rachel Reeves said: "By pushing unemployment up to a 17-year high and choking off the recovery over a year ago, well before the recent eurozone crisis, the Government's reckless decision to raise taxes and cut spending further and faster has completely backfired."