£2trillion national debt the biggest for 60 years

BRITaIN’S national debt is at its highest level for 60 years after surging by more than £1billion a day during the Covid-19 crisis.

Official figures have laid bare the enormous strain the pandemic is placing on the public finances.

according to the Office for National Statistics, the Government borrowed £36.1billion last month – meaning the debt has swollen by £208.5billion between april and September. The six-month loans binge had pushed the national debt to a record £2.06trillion, or 103.5 per cent of Britain’s annual economic output.

This is the highest share of gross domestic product since 1960, when the country was still saddled with debts from the Second World War.

The amount borrowed in just six months is almost four times the amount borrowed in the whole of the last financial year.

Yesterday the Chancellor moved to allay fears of imminent tax rises or spending cuts to bring the public finances back under control.

But he also made it clear that tough choices would have to be made as the economy recovers.

He said: ‘Whilst it’s clear that the pandemic has had a significant impact on our public finances, things would have been far worse had we not acted in the way we did to protect millions of livelihoods. Our enduring priority is to protect as many jobs and businesses as possible through this pandemic, which is the fiscally responsible thing to do.’ He added: ‘Over time and as the economy recovers, the Government will take the necessary steps to ensure the long-term health of the public finances.’

The Chancellor dismayed backbenchers when he admitted at the Tory conference earlier this month that it would be difficult to stick to the party’s manifesto pledge not to increase income tax, national insurance or VaT.

Even the suggestion of tax rises has put him at loggerheads with many in his own party.

David Davis, former Brexit secretary, said Mr Sunak’s latest comments suggest he has backed away from tax rises in the near future.

‘This is encouraging, as previous statements from the Treasury suggested it was going to put up taxes straight away,’ he said. ‘a huge debt burden like this has to be dealt with over a very long horizon – probably 50 years.’

Britain’s leading economic think tank, the Institute of Fiscal Studies, has warned that although tax rises are inevitable, the economy is too fragile to introduce them now.

and the Washington-based International Monetary Fund has said that, for now, advanced economies should continue to take advantage ultra-low interest rates.