Rishi Sunak warns of huge government spending as UK debt hits £ 2.2 trillion
RISHI Sunak issued a wake-up call to continue massive government spending last night as Britain’s debt hit £ 2.2 trillion.
The Chancellor said Britain must step up efforts to keep debt under control and get our finances back on track amid mounting tensions over splashing taxpayer money.
It came as former Tory Chancellor Ken Clarke warned ministers of the billion-pound follies on a royal yacht Britain couldn’t afford – and claimed higher taxes are needed to reduce growing debt.
Ministers borrowed an additional £ 24.3 billion in May, up from £ 43.8 billion a year earlier at the height of the Covid pandemic, the Office for National Statistics said last night.
But the numbers were far lower than feared as Britain reopened and returned to shops, pubs and restaurants.
And tax revenues surged from fuel and VAT as consumer spending showed signs of rebounding.
The statistics watchdog has downgraded total borrowing for the year to £ 1.1bn – but this is still the highest level since the end of World War II, at 99% of GDP.
A cautious Mr. Sunak said last night: “As we emerge from the pandemic, we continue to help people and businesses get back on their feet and our Jobs Plan is working.
“It is also important in the medium term to consolidate public finances.
“That is why, in the March budget, I laid out the difficult but necessary steps we are taking to keep the debt under control for years to come.” The latest debt statistics have sparked new hope that the UK economy could escape gloomy predictions by economists and rebound by the end of the year.
Capital Economics said: “The strong economic recovery is starting to trickle down to lower government borrowing.
“This reinforces our view that the tax hikes and spending cuts that most fear can be avoided.” But yesterday, former Tory Chancellor Lord (Ken) Clarke said inflation was a ‘big risk’ for the next few years and insisted Rishi will have to raise taxes to pay his £ 300bn. of Covid spending.
He told BBC Radio 4: “You have to start asking yourself the serious question of how to pay off this fantastic amount of borrowing wisely and responsibly so that you can maintain fiscal discipline in the future.” And he criticized the £ 200million ministers are spending on a new royal yacht as a “total waste of time” and “silly populist nonsense” for which “we have no money”.
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He blasted: “£ 200million isn’t going to be a problem, but it shows that there are people in No 10 who just think there is free money and think there is waving a Union Jack and sending yachts and aircraft carriers around the world shows just how powerful we are. ” Downing Street dismissed the criticism last night and said the new flagship “would boost UK trade and boost investment in our economy”.
And Matt Hancock insisted he “would pay more than many times” in terms of starting our business.
The Prime Minister’s spokesperson said: “We will come up with the full cost in due course.”
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