Home > Business > U.K. Government Debt Tops £2 Trillion: Live Updates

U.K. Government Debt Tops £2 Trillion: Live Updates


  • Futures on Wall Street wavered between gains and losses on Friday; European markets were modestly higher before falling into negative territory; Asian markets finished the week on an upswing.

  • A new round of data from Purchasing Managers’ Indexes cast doubt on the strength of the European economy’s recovery. “The eurozone’s rebound lost momentum in August, highlighting the inherent demand weaknesses caused by the Covid-19 pandemic,” said Andrew Harker of IHS Markit.

  • For the first time, the British national debt reached above 2 trillion pounds ($2.6 trillion), reflecting the steep borrowing underway to support the country through the pandemic.

  • The United States is borrowing a lot of money too, and the national debt recently crossed a big threshold: It is now larger than the overall economy. But the doomsday scenario that deficit hawks have long predicted has not materialized, and more borrowing is on the way.

  • The U.S. Labor Department’s report on the health of the job market on Thursday served as a reminder of the fragility of the economic recovery: The tally of new claims for state unemployment benefits unexpectedly rose to over 1.1 million.

  • On Thursday, the S&P 500 closed higher, lifted by more gains in technology stocks.

Government debt in Britain has exceeded 2 trillion pounds ($2.6 trillion) for the first time, according to official statistics published on Friday.

Debt reached 100.5 percent of gross domestic product at the end of July, as the government spent heavily to combat the severe economic shock of the pandemic and dealt with falling tax receipts. It’s the first time national government debt has been larger than the size of the economy since 1961, the Office for National Statistics said. In the United States, debt outgrew the size of the economy in June.

Even as the debt levels climb, it’s costing the government less to make interest payments because of incredibly low and even negative interest rates.

Though the pandemic has had an “unprecedented” impact on Britain’s public finances, the government statisticians reduced their estimates for how much borrowing was necessary between April and June, the months of lockdown, because of higher-than-expected tax receipts.

Separate data showed more evidence that Britain’s economic recovery, which began tentatively in May, was still underway.

In July, the volume of retail sales was 3 percent larger than in February, before the pandemic, as the vast majority of businesses resumed trading. Online and food sales remained at untypically high levels, but the data showed a pickup in spending on fuel and clothing, two items that had been particularly hard hit during the shutdown. And a survey of business activity recorded a second month of expansion for August.

Credit…Olivier Douliery/Agence France-Presse — Getty Images

Economists and deficit hawks have warned for decades that the United States was borrowing too much money. The federal debt was ballooning so fast, they said, that economic ruin was inevitable: Interest rates would skyrocket, taxes would rise and inflation would probably run wild.

The death spiral could be set off once the debt surpassed the size of the U.S. economy — a turning point that was probably still years in the future.

It actually happened much sooner: sometime before the end of June.

The coronavirus pandemic, and the economic collapse that followed, unleashed a historic run of government borrowing: trillions of dollars for stimulus payments, unemployment insurance expansions, and loans to prop up small businesses and to keep big companies afloat.

But the economy hasn’t drowned in the flood of red ink — and there’s a growing sense that the country could take on even more without any serious consequences.

“At this stage, I think, nobody is very worried about debt,” said Olivier Blanchard, a senior fellow at the Peterson Institute for International Economics and a former chief economist for the International Monetary Fund. “It’s clear that we can probably go where we are going, which is debt ratios above 100 percent in many countries. And that’s not the end of the world.”

That nonchalant attitude toward what were once thought to be major breaking points reflects an evolution in the way investors, economists and central bankers think about government debt.

As levels of debt among rich nations like the United States and Japan have climbed relentlessly in recent decades, the cost of carrying that debt — reflected in interest rates — has tumbled, leaving little indication that markets were losing confidence in the willingness and ability of these countries to carry their financial burdens.

The editors and reporters for the DealBook newsletter sift through a lot of company reports and listen to many earnings conference calls. These are some of the things that caught our notice this week, a big one for retailers explaining consumers’ shifting habits during the pandemic:

🎣 “We think about 25 million Americans would go fishing on a regular basis before February, and that number has now moved to 35 million.” — John Furner, the president of Walmart’s U.S. division, on new pandemic pastimes.

💄 “Wearing masks in many parts of the world … had an impact on lipstick.” — Fabrizio Freda, the chief executive of Estée Lauder, to analysts on how moisturizer has replaced lipstick as an affordable indulgence during the recession.

👃 “Making your home smell like you want it to is something that our customer has continued to express interest in and again, something we would expect to continue through the pandemic.” — Andrew Meslow, the chief executive of Bath & Body Works’ parent company L Brands, on growth in its “home fragrance” business line.

🔨 “Just a robust decking boom.” — Ted Decker, Home Depot’s head of merchandising, on one factor driving a surge in sales during lockdowns.

🦠 “It does not seem to be under control in any shape or form.” — Trond Grande, the deputy chief executive of Norway’s sovereign wealth fund, on the coronavirus.

Credit…Alex Welsh for The New York Times

The pandemic, which closed theaters around the world, wreaked havoc on the premiere dates of movies like “Tenet” and “Wonder Woman 1984.”

But unlike dozens of other movies, “Unhinged,” a gritty action film starring Russell Crowe, will indeed have a theatrical release in the United States this summer, signaling a return to business for Hollywood.

The original plan was for a July 1 premiere. The date was pushed back twice more before the film was scheduled to appear on Friday in more than 1,800 theaters in the United States and Canada, a release that came about largely because of the stubbornness of Mark Gill, an independent film producer who was hellbent on getting it to the big screen.

“Unhinged” will be the largest new offering in North American theaters this weekend, when 26 percent of theaters in the United States and Canada are scheduled to be open, according to the National Association of Theatre Owners, a trade association.

While other Hollywood executives decided they had no choice but to reschedule, Mr. Gill made a priority of beating the competition to theaters. “There is no question that the ‘first-mover’ advantage has been a big deal,” he said.

He believes in the film — a throwback to the thrillers of decades ago that sent Charles Bronson into scenery-trampling mode — but said he could not predict how many moviegoers would show up this weekend, when theaters across the country have heightened safety restrictions.

“It’s all bananas,” Mr. Gill said. “That’s the crazy thing. I have no idea.”

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