Britain's debt ratio is at its highest level since 1961

Just before the general election, Britain's debt ratio, that is debt relative to GDP, is at its highest level in 60 years. So the new government will face massive challenges.

Two weeks before a general election in which the ruling Tories are threatened with ouster, Britain's national debt has risen to its highest level in more than 60 years. It reached 2.742 trillion pounds (3.25 trillion euros) in May, the ONS statistics office in London announced today.

The debt ratio, i.e. debt to gross domestic product (GDP) was 99.8 percent – ​​the highest value since 1961. It was 96.1 percent a year ago.

Finance Challenges Topic of election campaign

The rising national debt adds to the fiscal challenges facing the future government. Great Britain has a general election on July 4th. Keir Starmer's opposition Labor Party is betting on change after 14 years of chaos, as he recounts the Conservatives' time in government under Prime Minister Liz Truss, which brought Brexit, Brexit and crashing financial markets.

Both parties promise not to increase income tax, VAT or other major taxes. Great Britain's national debt has soared during the coronavirus pandemic. Slow economic growth and interest rates raised by the Bank of England to a 16-year high in a fight against inflation are putting pressure on government budgets.

Current Prime Minister Rishi Sunak emphasized the need for a clear plan and bold action in uncertain times. Unlike the Social Democratic Party – he has this plan. However, opinion polls show Labor leading the Tories by around 20 percentage points. The conservatives, who have been in power since 2010, are suffering a bitter electoral defeat. Sunak has been in office since October 2022 and is already the third head of government since the previous election in 2019, after Boris Johnson and Truss.

Debt has increased in many countries

Debt has also risen sharply in other Western countries recently. Britain's debt levels are lower than those of the US, France and Italy. In the European Union alone, seven member states are threatened with criminal proceedings because they are over-indebted.

Germany, however, shows much lower figures: last year, it accounted for only 63.6 percent of GDP, a number that the Kiel Institute for the World Economy forecasts will drop to 63.3 percent.

Borrowing in the UK totaled £33.5 billion in the first two months of the new financial year. This is £0.4 billion more than the same period in 2023, but £1.5 billion less than the government's budget projections in March. According to analysts at Capital Economics, this is due to less public investment.