For the first time since 1963 the UK’s debt has exceeded the size of the UK economy; the amount borrowed currently stands at £103.7bn.
In the first two months of the financial year the UK Government borrowed £87bn more than the same period last year – the highest on record.
The Office for Budget Responsibility (OBR) had initially estimated that borrowing (for the whole year) would reach £298.4bn.
The amount borrowed in April was £48.5bn. The amount borrowed in May is said to have been £55.2bn, nine times more than the same month last year and the highest for any month on record.
Value Added Tax (VAT), Pay As You Earn (PAYE) Income Tax and Corporation Tax receipts fell by 46%, 29.4% and 14% respectively.
The UK’s overall debt was £1.95tn at the end of May this year. This is an increase of £173.2bn since the end of May last year and is the largest annual increase ever seen, equivalent to 100.9% of GDP.
On Friday, Chancellor of the Exchequer Rishi Sunak said: “Today’s figures confirm that coronavirus is having a severe impact on our public finances. The best way to restore our public finances to a more sustainable footing is to safely re-open our economy so people can return to work.”
“We’ve set out our plan to do this in a gradual and safe fashion, including re-opening high streets across the country this week, as we kick-start our economic recovery.”
What is clear is that this debt exists because of the 2-metre rule and the lockdown. Had we not implemented these, we would be in a better position financially.
No-one actually knows how effective the lockdown was. I have read and seen numerous articles on the idea of lockdown; some were for and some were against. Both had very compelling arguments. Personally, I was against.
But what we do know for definite is that lockdown has increased social tension, inequality and debt. Even if there were a second wave of the virus, we absolutely cannot enter lockdown again.
We won’t really know the actual cost of coronavirus until every business is back up and running and the Government’s coronavirus support schemes have come to an end in October. Only then will we have a clear idea of the damage done.
The inevitable recession is not that far away and people need to be prepared.
Perhaps, only once that hits, might people wish they’d given it some thought before bowing to the Government’s lockdown and stay-at-home orders.
It was a farce. People obeyed without questioning it, informed on their neighbours and clapped like monkeys every Thursday at 8pm. Personally, I thought it was feeble.
The financial implications are coming and they will hit harder than this virus has – a lot harder – on personal, national and international levels.
Buckle up, people!