Member Article

PwC projects total UK public and private debt to hit £10 trillion by 2015

TOTAL UK debt is projected to top £10 trillion by 2015, according to the PwC’s latest UK Economic Outlook report.

UK debt was around 540% of GDP at the end of 2009, up from around 200% of GDP in 1987.

This large and persistent rise in total UK debt has been driven by property-related borrowing by both households and non-financial companies and (most dramatically since 2000) by sharply rising lending between financial institutions.

By comparison, UK government debt was relatively low and stable as a share of GDP from 1987 to 2007 and, despite rising sharply due to the recession, was still less than a sixth of total private sector debt in 2009.

High debt levels are affordable at present due to exceptionally low interest rates, but this may not remain the case as rates gradually rise back to more normal levels over the next five years.

PwC analysis of official national accounts data shows that the total burden of debt on the UK economy rose from around twice national income in 1987 to just over three times national income in 2000, but then accelerated much more rapidly to around 5.4 times national income by 2009.

This total UK debt to GDP ratio continued to rise even during the recession of 2008-9 as GDP fell back and government debt rose markedly.

This was posted in Bdaily's Members' News section by Ruth Mitchell .