According to the Office of National Statistics, the UK is mired in debt. Britain’s public debt has surpassed the size of the country’s economic output, hitting its highest level since records began.
The overall debt size is not so huge by global standards. However, two trillion pounds, or just over $2.6 trillion, for Britain is a decent amount. In addition, given the sufficient number of external and internal downbeat factors, the prospects for the country are very gloomy. Government spending is likely to increase in the near future, while the same cannot be said for revenues. The debt surge reflects increased expenditures on fighting the coronavirus pandemic. Although the authorities have already allocated enormous sums of money to counter its impact, the greater costs are ahead. Moreover, public debt is not the only problem. The UK economy as a whole seems to be crumbling. The budget deficit stood at 26.7 billion pounds ($35 billion) in July. British government borrowing leapt to 150.5 billion pounds ($197.7 billion) in the first four months of the 2020-2021 fiscal year (starting from April).
The Bank of England expects the UK economy to shrink by 14% this year, facing its biggest slump in GDP since 1706. However, the central bank's downward scenario does not apply to all economic indicators. The unemployment rate, on the contrary, is likely to rise to 9% from 4%.
