Abacus Daily Debt News

Debt levels aided by government borrowing

Debt in the UK could have less of an impact on the average person with debt management problems  due to the government’s ability to borrow at a lower rate, one expert has suggested.

Gemma Petlow, a senior researcher at the Institute for Fiscal Studies (IFS), commented that while the amount people owe is expected to go up it may not have a significant effect on servicing the national debt-to-GDP (gross domestic product) ratios.

She said: “In some sense the additional burden is being mitigated by the fact that the government can borrow relatively cheaply.”

Debt is expected to reach “historically high levels” in the next couple of years, but having started at a point where the share of debt to GDP was low it could give the UK some leeway in the short term, she added.

This follows Budget forecasts by Alastair Darling on April 22nd that net public sector borrowing will reach £175 billion in 2009 and represent 11.9 per cent of GDP the following year.

By Francis Finch