UK national debt hits record £2.024 trillion as government goes on coronavirus spending spree

The UK’s national debt hit a record £2.024 trillion at the end of August, £249.5 billion more than the same time last year.

To put the figures in some perspective, the debt level works out a roughly £30,000 per person living in the UK.

It pushed borrowing up to 101.9% of gross domestic product (GDP) after the public sector borrowed around £35.9 billion in August, according to new data from the Office for National Statistics.

The August figure means the public sector borrowed more in a single month than at any time since 1993, when monthly records began.

National debt passed £2 trillion for the first time in history in July as the Government throws billions at offsetting the economic chaos caused by the Covid-19 crisis.

The debt surge reflects a huge increase in government spending, ranging from its massive furlough scheme and tax cuts to discounts for restaurant diners.

Both central and local Government is investing billions of pounds in trying to help people and the economy through the chaos caused by the Covid-19 pandemic.

Yesterday Chancellor Rishi Sunak announced a series of extensions to existing programmes, and a replacement for the furlough scheme which has so far cost the Treasury more than £39 billion.

Officials in the Treasury have been forced to turn to loans to make up the cash, especially as the amount of tax being collected falls.

Worryingly for Sunak the figures from the ONS showed that central Government’s tax receipts reached £37.3 billion last month, which is £7.5 billion less than a year before.

The amount of VAT, corporation tax and income tax collected by the tax man fell considerably, the ONS said.

The money was used to fund £78.5 billion worth of day-to-day spending at central Government, which was £19.5 billion higher than August 2019.

Just over £6 billion of this funded the salaries of furloughed workers, while £4.7 billion paid for support to the self-employed.

Howard Archer, chief economic advisor to the EY ITEM Club, said: “The state of public finances over April to August heralds what is clearly going to be a record year for the budget deficit. This is even allowing for the fact that the rate of decline in the public finances should slow as the economy continues to recover following record contraction of 20.4% quarter-on-quarter in the second quarter.”