UK national debt passes £3 trillion mark as borrowing costs surge

The size of the UK's national debt has now risen above £3 trillion, analysis has suggested, reflecting the burden facing taxpayers across the country.

A tracker by a rightwing campaign group and think tank has suggested that national debt had reached the long-awaited milestone after an explosion in spending since 2020.

The Taxpayers' Alliance based its calculations on recent government borrowing data, plus data from the Office for National Statistics and Office for Budget Responsibility.

The official data body said last month that the national debt was at £2.99 trillion. It will publish new figures on 21 August.

John O'Connell, chief executive of the group, said households would be "horrified" by the news that they each owed around £103,000 in debt to the government's lenders.

"Despite repeated warnings, politicians have allowed the national debt to run out of control and increase to levels unthinkable even a decade ago," he said.

"If Andy Burnham is serious about ushering in a new economic model, he should do it without creating a bigger bill for our children and grandchildren to pay off."

The campaigners added that hidden liabilities, including on public sector pensions, meant the true size of debt was larger.

As a share of GDP, the size of debt is hovering around 95 per cent.

In as recently as 2004, debt as a proportion of the UK economy was under 30 per cent.

Analysis also showed that the UK took 11 years to accumulate £1 trillion in the years leading up to 2020.

Spending has far out-paced income over the last six years, the time frame in which another £1 trillion has been added to the debt load.

The Taxpayers' Alliance said Andy Burnham had inherited one of the worst public sector debts on record, with Tony Blair coming into office owing just around £352bn.

The government revealed in May that it had already spent £380bn on Covid-19 and still had sums left to pay. Covid-19 has been the largest driver of extra government spending.

The subsequent energy support package for Brits in response to the energy price shock from Russia's full-scale invasion of Ukraine and a series of interest rate hikes by the Bank of England also squeezed public finances.

But a move to raise spending in real terms by easing borrowing rules amid a Labour-led pushback against "austerity" has further added to the debt load.

Higher debt has contributed to an increase in borrowing costs. The UK is projected to pay more than £110bn this year in debt interest payments, which is nearly double what is spent on the Ministry of Defence each year.

Reporting for CityAM Canada on business and the wider Canadian economy.

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