Public debt in Britain crossed the £ 2 trillion mark for the first time with the government increasing public spending to tackle the coronavirus pandemic. At the end of July it stood at 2,004 billion pounds, 227.6 billion more than in the same period last year. The debt / GDP ratio was 100.5% with an increase of 20.4 percentage points compared to the previous year.
It is the first time it has exceeded 100% since the financial year ended in March 1961. It should be remembered that due to Covid-19, the UK’s GDP collapsed by 20.4% quarterly and by 21.7% on annual basis in the preliminary reading of the second quarter of this year. After the 2.2% decline in the January-March period, the country is therefore officially in recession. However, the figure was slightly better than the consensus of economists, who expected a drop in GDP of 21.2% (quarter / quarter).
UK public debt, excluding public sector banks, is estimated to have been £ 26.7bn, up £ 28.3bn from July 2019 and the fourth highest since filing began in 1993. said the Office for National Statistics. Loans in the April-July period, the first four months of the financial year, said Reuters, rose to 150.5 billion pounds, nearly three times the government loan in the previous financial year.
“Today’s data offers a clear warning that we need to get our public finances back on a sustainable level over time, which will require tough decisions,” British Finance Minister Rishi Sunak noted, quoted by Reuters. It should be noted that, however, retail sales in Great Britain rose above expectations again in July. They grew 3.6% over the previous month and 1.4% year-on-year, returning to pre-pandemic levels. Expectations were for growth of 1.4% on month and 0.1% on year.
Finally, the British manufacturing PMI, in the preliminary reading of August, rose to 55.3 points from 53.3 in July. The data, the economists of IHS Markit pointed out, is on the highs of 30 months and above the consensus estimates of 53.6 points. The services SME also rose to 60.1 points from 56.5 in July. The reading, in this case, is on the highs from 72 months and above the consensus expectations at 57 points.
Awaiting the 11am press conference by EU Brexit chief negotiator Michel Barnier at the end of the seventh round of EU-UK negotiations on future relations, the pound remains above 1.32 against the dollar at 1.32282 ( + 0.12%), recovering from this week’s low of 1.3062, but still remaining far from Tuesday’s eight-month high of 1.3276.
The pound is shaking off the minutes of the European Central Bank. Minutes from the ECB’s latest July meeting suggested yesterday that some members are not eager for another € 1.35 trillion pandemic emergency purchase (PEPP) hike. The pound has risen more than 7% against the dollar in the past three months.
However, currency experts explained that this is due more to the weakness of the greenback as the coronavirus pandemic and Brexit precautions justify a depreciation of the pound. The UK has reiterated multiple times that it still hopes to reach a post-Brexit trade deal in the coming weeks but, with little noticeable progress so far, time seems limited, experts said.
“While US politics can at times appear to be a comedy, British politics is now more like a joke,” commented Mark Dowding, CIO of BlueBay. “With the Brexit talks restarting, the hope is that the government will be able to at least get a meager deal with the Union at the last minute in the coming weeks. However, in the face of the looming reality of the exit, it appears that there There are still many aspects to be resolved and compromised. For now, the Johnson government’s mantra seems to be that if something can go wrong, it will. Pyrrhus. From this point of view, we maintain a relatively negative view on sterling and British assets “, Dowding warned. (All rights reserved)
