Daily Brief – UK Government Borrowing

UK Government Borrowing

At GBP 2.7 trillion or 2,700 billion, the UK is one of the most indebted nations, but to put that in perspective the UK Government borrowing is equivalent to 96% or almost 1 year of the UK’s Gross Domestic Product. Broadly between 1975 and 2008, the percentage was between 40 and 50%. The financial crisis put paid to that and was then exacerbated by Covid. The current borrowing number causing furrowed brows across markets is that the UK’s monthly borrowing at GBP 20.7 billion is GBP 6.6 billion higher in June 2025 than it was in June 2024. In other words, Chancellor Reeves’ pre-emptive fix it budget of 2024 has not fixed it, and another one is in prospect this Autumn. If that is not enough to choke on at breakfast, the cost of funding that debt mountain is not being matched by income, which means that rather than prudently reducing UK Government debt, it is growing not to fund revenue generating projects but to keep pace (or not) with the interest bills.

GBP/USD 1.3488.

Inherited Wealth versus Self-Made Wealth

With the chat all about a wealth tax in the UK, all sorts of stats are being trotted out, but perhaps the most misguided is one that tries to make the case for self made billionaires outnumbering inherited billionaires. As is described below this is not really the point since there are only 3000 billionaires globally; so a statistically insignificant number given the world population of 7.5 billion. The point is that the highest number of self made billionaires versus inherited billionaires are, of course, in China and Russia but that is to do with political regime change which enabled a lucky few to help themselves to state assets. The USA is 73-27 in favour of self made whereas conversely Germany, Italy, Spain and Belgium are all 25-75. And the UK? Surprisingly 89-11 in favour of self made, but that is rather more due to the fact that the UK can only field 156 billionaires versus the USA’s 856. Billionaires apart from to themselves are not the point when it comes to a Wealth Tax, it is the great rump of rich and mass affluent people who are affected and who due to their wealth, are mobile.

GBP/EUR 1.1530.

UK Unemployed Rise

Only in politics: on Monday UK PM Sir Keir testified to the Commons liaison committee that a rise in May year on year unemployment from 4.4% to 4.7% was positive. Defying the actual numbers, economics, and political nous, Sir Keir explained this by claiming that the economically inactive 9.9 million had shifted due to some people moving into the looking for work category. Cynics would say that they are still unemployed/economically inactive which means the UK is paying for them while an increasingly large chunk of the electorate will be asking themselves whether Sir Keir really does believe that they will swallow such tosh.

EUR/JPY 172.60.

POTUS

Scottish readers planning on spending the weekend in Scotland would do well to consider the wiseness or otherwise of going anywhere near Aberdeen or Turnberry on the opposite coast due to POTUS arriving for a long weekend on Friday when he will meet UK PM Sir Keir Starmer, play some golf, and inspect his new golf course that he is building in Aberdeenshire. The presidential cavalcade is causing logistical issues for a shorthanded Police Scotland and there will be a collective sigh of relief when Air Force One lifts off on Monday. It is however only a brief respite as POTUS is being hosted by the King and Queen 400 miles south at Windsor Castle between September 17 and 19. Our Home Counties readers might want to mark their diaries to avoid an area encompassing from West London to Windsor on those days. Think Royal ascot traffic but a lot worse.

EUR/USD 1.1696.

Drive

This number their third single on the album Heartbreak City from Boston band The Cars was released this day in 1984 and stormed up the charts to commercial success thereby searing itself into the consciousness of global yoof and all wannabee bad boy street racers.

Who’s gonna tell you when
it’s too late
who’s gonna tell you things
aren’t so great
you can’t go on
thinking nothing’s wrong
who’s gonna drive you home tonight

who’s gonna pick you up
when you fall
who’s gonna hang it up
when you call
who’s gonna pay attention
to your dreams
who’s gonna plug their ears
when you scream

you can’t go on
thinking nothing’s wrong
who’s gonna drive you home tonight

who’s gonna hold you down
when you shake
who’s gonna come around
when you break

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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