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UK debt below six EU member states

UK debt below six EU member states
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Many European countries continue to suffer from high public debt, with the highest debt-to-GDP ratios concentrated in a few member states.

At the close of the third quarter of 2023, Greece topped the list with a staggering 165.5 percent debt to GDP ratio. It was followed by Italy (140.6 percent), France (111.9 percent), Spain (109.8 percent), Belgium (108 percent) and Portugal (107.5 percent).

According to the recent EU Commission data, Estonia boasted the lowest ratio at 18.2 percent, followed by Bulgaria (21 percent), Luxembourg (25.7 percent), Sweden (29.7 percent) and Denmark (30.1 percent).

Eurostat data indicates that debt securities comprised 83.6 percent of the Eurozone’s general government debt and 83.1 percent of the EU’s debt by the end of the third quarter of 2023.

The UK recorded a government debt level below six EU member states, but still higher than the European average.

The UK government borrowed £119billion in the financial year up to December 2023. Although this marked an £11billion increase compared to the previous year, it was £5billion less than the Office for Budget Responsibility (OBR) had forecasted in November 2023.

As of December 2023, the UK’s government debt was equivalent to 97.7 percent of GDP, showing a rise from the 95.8 percent recorded a year earlier.

Excluding the Bank of England’s debt, an alternative measure of the Government’s underlying debt stood at 88.7 percent of GDP, up from 85.1 percent at the close of December 2022.

However, lower-than-expected government borrowing in the past month has ignited speculation about potential tax cuts in the upcoming Budget, according to analysts.

Recent data released by the Office for National Statistics (ONS) indicates that borrowing, the disparity between government spending and tax income, plummeted to £7.8billion in December. This substantial drop of £8.4billion from the same period a year ago marks the lowest December figure since 2019.

The decrease in interest payments played a pivotal role in this fiscal development, with payments on government debt dwindling to £4billion. This represents a £14.1billion reduction from December 2022. The decline was notably influenced by the sharp decrease in inflation over the past year, as the Government’s interest payments are closely tied to the Retail Prices Index measure of inflation.

Economists and financial experts suggest that these recent figures could provide the Chancellor with additional “wiggle room” to consider tax cuts.

The unexpected fiscal resilience offers a potential window of opportunity for the UK Government to implement tax reduction measures, a sentiment echoed by Chancellor Jeremy Hunt during his speech at the World Economic Forum in Davos last week.

Mr Hunt hinted at his inclination towards tax cuts, raising expectations that such measures might be announced in the Budget scheduled for March. The anticipation is further fuelled by the likelihood of a general election later in the year.

The positive fiscal indicators for December not only mark a significant improvement from the previous year but also highlight the potential for strategic economic decisions in the UK’s pursuit of financial stability and growth.

It’s crucial to note that the figures provided by the ONS for the fiscal years 2022/23 and 2023/24 are provisional and subject to revision as provisional data are replaced with final audited data.

Mzaad
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Dulal Ahmed Chowdhury

Dulal Ahmed Chowdhury is the Editor of The Daily Dazzling Dawn. Previously, he has been serving in important positions in all the famous national dailies of the Bangladesh since the nineties. He has played a commendable role in journalism by participating in various events at the national and international levels. United Nations Conference, World Climate Conference, SAARC Summit are notable among them.

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