Debt is falling
In a video posted to X (formerly Twitter) to coincide with the King’s Speech, Rishi Sunak claimed the UK’s “debt is falling”. This refers to one of Mr Sunak’s five priorities for 2023, which he said was to reduce national debt so that “we can secure the future of public services”.
However, according to the latest official data the national debt is not falling—it has increased over the last year. Overall public sector net debt is forecast to fall from next year, while underlying public sector net debt, the measure the government uses in its target, is not forecast to fall for several years.
Ministers and government departments must provide evidence for what they say, and ensure that any statistics and data they rely on to back up their claims are provided publicly in accordance with the Code of Practice for Statistics or relevant guidance.
If an MP or minister makes a false or misleading claim on social media, they should correct this quickly in a clear and transparent manner, including on the same platform where the claim was made.
We have approached Mr Sunak and Downing Street for comment and will update this article if we get a response. However, according to a report from Politico, Downing Street has since clarified that Mr Sunak intended to say that debt is forecast to fall, not that it is falling currently.
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How is national debt measured?
There are two main measures of national debt, neither of which show that it is currently falling, according to the latest data.
The government’s debt target focuses on ‘underlying’ public sector net debt, which excludes the amount owed by the government to public sector banks, and the Bank of England’s debt. According to Isabel Stockton, senior research economist at the Institute for Fiscal Studies (IFS), this is the “more meaningful” measure when it comes to evaluating fiscal policy.
In September 2023, underlying public sector net debt was £2,372.9 billion, around 89.3% of the UK’s gross domestic product (GDP). It has increased since September 2022, when it was £2,129 billion, or 83.4% of GDP.
Meanwhile overall public sector net debt excludes the amount owed by the government to public sector banks, but does include the Bank of England’s debt. According to the ONS, this is the most commonly used measure of public debt.
In September 2023, overall public sector net debt was £2,599 billion, around 97.8% of GDP. According to the ONS, this represents a 2.1 percentage point increase compared to September 2022.
What else do the figures show?
Ben Zaranko, another senior research economist at the IFS, said: “It’s not accurate to say that debt is falling. Public sector debt is currently rising in cash terms, real terms and (most importantly) as a per cent of national income.”
As others have pointed out, neither measure of the UK’s national debt is expected to fall until next year at the earliest. The Office for Budget Responsibility (OBR) has forecast that underlying public sector net debt will not peak until 2026-27 and fall until 2027-28, while in March it predicted overall public sector net debt will peak “next year”, in 2023-24.
September’s overall public sector net debt figure is lower as a proportion of GDP than the OBR had predicted in March, but this does not mean that national debt is currently falling.
It may be the case that overall public sector net debt is now stabilising, but if there has been any recent fall it has yet to show up in published quarterly data, according to Ms Stockton.
“Headline public sector net debt has just—as in, the past quarter—stabilised in cash terms, so is probably falling ever so slightly as a percentage of GDP, though we don’t actually have that quarterly GDP outturn yet,” she said.
According to the ONS’ monthly figures, overall public sector net debt has decreased on two occasions since Mr Sunak became Prime Minister. It fell from £2,495.8 billion in December 2022 to £2,484.9 billion in January 2023, and from £2,598.4 billion in June 2023 to £2,581.3 billion in July 2023. However, debt has risen since then, and reached £2,599 billion in September—its highest figure since Mr Sunak became Prime Minister.
Image courtesy of Chris McAndrew.