The Office for National Statistics has released figures that show at the end of June, the amount of money Britain owes accounted for 81.5 per cent of the country’s Gross Domestic Product (GDP). This figure has risen from 80.8 per cent just a month earlier.
In addition to the rise of the country’s debt, borrowing fell by less that expected. This dealt Chancellor George Osborne a double blow, as these were the first set of figures released since the Budget.
Public sector borrowing fell by eight per cent to £900 billion, £800 million less than last year. But the drop is expected to reach 22 per cent over the year.
If the trend continues, by the end of the year the deficit will reach £71.5 billion. This prediction is £2 billion higher than the forecast made by the Office for Budget Responsibility (OBR) in the Summer Budget.
A growth in spending has fuelled the growing debt. Spending has now reached £58.1 billion, approximately a four per cent rise on the same time last year.
Around half of the spending was down to Government departments, including education, defence and health, and around a quarter on benefits.
Senior UK economist at Capital Economics, Samuel Tombs, said: “While June’s public finances bring less encouraging news on the pace of deficit reduction, there is no need for the Chancellor to panic yet.
“The overshoot in borrowing relative to the official forecasts entirely reflected stronger growth in current spending (2.9 per cent) than the OBR expects (1.0 per cent), rather than economic weakness.
“Indeed, annual growth in tax receipts of 4.4 per cent slightly exceeded the OBR’s forecast of 4.1 per cent.
“Accordingly, we do not think that June’s borrowing figures should ring any alarm bells yet.”