How the UK’s Government Debt increases by £129,556 every minute
The headlines are full of numbers, especially with the concerns around Brexit and how much money the UK will save by leaving and the ongoing efforts of government to save money. But with lots of different numbers being quoted, what’s the true picture?
First let’s look at debt. Because the government currently spends more than it takes in through taxes, it has to borrow money to cover the shortfall so it can keep public services going. Usually when debt is talked about in the media, net debt is used. This is the total debt minus whatever the government has.
Gross Domestic Product (GDP) is the total value of all the goods produced within a country. This gets talked about a lot alongside Government Debt because thinking about debt as a percentage of GDP allows easy comparison between different countries which otherwise would be hard to compare. When you see countries ranked by the size of their economies, that’s GDP.
That leaves deficit. Remember that gap between what the government earnt in taxes and spent on public services that was leading to the government having to borrow? That’s the deficit. If the government was making more than it spent, then it would be in surplus.
So, what’s going on in the UK? This research from Solution Loans shows a number of areas of the UK economy as well as personal finance numbers minute by minute and shows UK Government debt increasing by £129,556 every minute.
That’s a staggering amount but it used to be much higher. When the current government took over the amount borrowed that year was about 9.9% of GDP, thanks to the financial crash. Its now down to 2.6%.
However, whist the amount borrowed this year is down on previous years (i.e. the deficit has come down) the total debt is still very large. It currently stands at 87% of GDP. This means that even if the government did manage to generate a surplus, it would have to keep that surplus in place for a long time to eat away at the debt. In short, it’ll be a long time before that national debt goes anywhere.