Warning over soaring UK debt
Updated on 19 January 2009
UK Government debt is set to rise to nearly 72% of GDP in 2010/2011, the European Commission has warned.
New forecasts of economic gloom across Europe came as Prime Minister Gordon Brown announced a second massive injection of cash to encourage banks to resume lending and kick-start consumer and business spending.
The Commission figures show the EU-wide slowdown sharpening this year, with GDP growth falling by 1.8% - but by 2.8% in the UK.
And a "pronounced fall in output" means unemployment is likely to rise by 8% this year, according to the Commission.
UK Government debt of more than 64% of GDP in 2009/10 will grow to 71.9% of GDP the following year.
The report says the weakening of domestic demand in the first three quarters of 2008 is expected to have continued into the fourth quarter when year-end figures are revealed. That would mean a further contraction of output by 1.25%.
The report on the UK situation goes on: "The ongoing scarcity of credit and further residential property price falls will constrain growth further in 2009, when annual output is expected to contract by 2.75%.
"Output is likely to show only a modest recovery in 2010, with annual growth of 0.25%."
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