Britain’s debt pile has expanded at a faster pace than any EU country apart from France since the pandemic began, official data shows.
The UK’s government debt has surged from 85.5pc of gross domestic product (GDP) in the last three months of 2019 to 100.5pc in the first three months of this year, a jump of 15 percentage points, the Office for National Statistics said.
By contrast, across the EU, the debt burden rose from 77.5pc of GDP to 83.7pc over the same period – an increase of only 6.2 percentage points, less than half the increase recorded in the UK.
It means that the UK’s debt pile grew at a faster pace than all EU nations, apart from France where the growth post-Covid debt-to-GDP ratio was the same as Britain’s. However, France’s overall burden was much larger, at 112.4pc of GDP at the start of the year.
A toxic cocktail of high government borrowing during the pandemic, sluggish UK economic growth and soaring borrowing costs mean the gap between Britain and the EU has more than doubled.
At the end of 2019, the UK’s debt burden as a share of GDP was eight percentage points higher than the EU’s. Now, the gap is 16.8 percentage points.
Barret Kupelian, chief economist at PwC, said: “Ultimately, the big difference in the UK is the lack of economic growth. It’s the denominator of the debt-to-GDP ratio.”
In the first three months of this year, UK GDP was still 0.5pc below where it was at the end of 2019, compared with in the eurozone where it was 2.7pc higher.
Sluggish UK growth is partly a hangover from the financial crisis, Mr Kupelian said.
Since then, productivity growth and business investment in the UK has become sluggish. Mr Kupelian added that the key difference to Europe is the continued decline in labour participation in the UK since the pandemic.
