TheBriefing
PUBLIC FINANCE
UK government debt highest since 1962
The UK’s national debt has reached its highest level since 1962, according to new official figures. The announcement casts doubt on whether the government will stimulate the economy with spending on new projects.
The total stock of government debt was worth 99.5% of the value of the economy in June, exceeding the highs reached during the Covid-19 pandemic for the first time. The Office for National Statistics figures also showed that the amount the government borrowed was more than expected in June.
Darren Jones, chief secretary to the Treasury, said the latest figures were a “clear reminder” of the “worst economic inheritance” since the Second World War.
EXPERTS' VIEWS ON...
Government spending plans
“I expect that the chancellor will be able to find various examples... of projects that the government had announced but never funded or underfunded or which are above budget or behind schedule.”
Michael Saunders, senior adviser, Oxford Economics
“Labour took over a strong economy – the fastest-growing in the G7, historically low unemployment – this left them in a positive position. It is undoubtedly setting a narrative to allow it to put up taxes.”
Helen Whately MP, shadow transport secretary, Conservatives
“While the Labour Party’s tax manifesto was light on detail, it is still very surprising to see the government make cuts to the Winter Fuel Payment. Many pensioners with genuinely modest incomes will be impacted.”
Robert Salter, director, Blick Rothenberg
Images: Getty/iStock
OFFICE FOR BUDGET RESPONSIBILITY
New law aimed to prevent repeat of Truss mini-Budget
The government is set to introduce a law aimed at preventing any future administration from sidelining the UK’s independent forecaster from assessing its economic plans – as former prime minister Liz Truss did for her ill-fated mini-Budget. Truss and her former chancellor, Kwasi Kwarteng, spooked the markets when they announced a series of uncosted tax cuts, having not consulted the Office for Budget Responsibility (OBR).
Powers will be given to the OBR to make judgments on any major taxation or spending announcements in a bid to deliver “stability”, the Treasury said.
Truss's mini-Budget saw her administration shun the OBR when it announced £45bn in unfunded tax cuts in September 2022, startling financial markets and leading to mortgage rates soaring.
The new Labour government hopes preventing such a move from happening again will build confidence among investors and boost economic growth.
News in numbers
The number of devices monitored daily across 176 countries by CrowdStrike.
Source: CrowdStrike
People in the UK who mainly used cash in 2023, up from 900,000 in 2022.
Source: UK Finance
The value of old UK coins and paper banknotes not cashed in.
Source: Bank of England
Percentage of invoices paid late in the UK.
Source: Sage
Extra amount the Royal Family will receive as Crown Estate profits soar.
Source: BBC News
Percentage of commercial landlords whose offices fail to turn a profit.
Source: InfinitSpace
ARTIFICIAL INTELLIGENCE
Sage earmarks £2bn AI boost to economy
Widespread adoption of artificial intelligence (AI) in accounting and bookkeeping practices could potentially add £2bn and 20,000 jobs to the UK economy, according to research from software firm Sage.
Around 1,100 accountants and bookkeepers were asked about AI’s threats and opportunities as part of the largest survey of the profession so far on AI. It found practices embracing AI expect to hire 10 times more employees, but only 16% feel well prepared to meet the AI skills demand.
The research, conducted alongside the Association of Chartered Certified Accountants and think tank Demos, puts forward the case for investing in AI skills through a reformed Apprenticeship Levy.
Aaron Harris, Sage’s chief technology officer, said: “AI adoption in accounting promises economic advantages, improved workplace wellbeing, and enhanced job satisfaction by automating routine tasks and attracting new talent. Without action to help the industry take advantage of the opportunity, there is a risk to future economic growth, competitiveness, and the UK’s status as a potential science and technology superpower.”
Indices
UK GDP growth
Between April and June 2024
UK unemployment
-0.2% between April and June 2024
Employment rate
+1.2% between April and June 2024
Consumer prices index
As of July 2024
House prices
Up year-on-year in July 2024
House price index
In July 2024
