National debt hits record £2.08trillion as Chancellor Rishi Sunak warns of cuts to come

The Chancellor warned public finances must be ‘put on a sustainable path’ (Image: AFP via Getty Images)

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Chancellor Rishi Sunak today warned of cuts to come as the UK’s debt hit a new record high of more than £2trillion.

Public sector net debt hit £2.08trillion by the end of October. That is also 100.8% of GDP, a ratio not seen since the early 1960s.

The Tory Chancellor said splurging billions on the coronavirus response was the right thing to do but warned of a reckoning to come.

Mr Sunak said: “We've provided over £200 billions of support to protect the economy, lives and livelihoods from the significant and far-reaching impacts of coronavirus.

"This is the responsible thing to do, but it's also clear that over time it's right we ensure the public finances are put on a sustainable path."

Pubs, restaurants and other venues have been forced to shut
(Image: Getty Images)

It comes as up to 5million public sector workers face a pay freeze or cap in 2021/22 – expected to be announced in the Chancellor’s spending review next Wednesday.

The Times, Guardian and Daily Mail all reported the Chancellor would announce the move for teachers, soldiers, police officers, civil servants and more.

However, nurses, doctors and other NHS workers would be exempt.

It comes despite public sector pay already falling far behind where it was a decade ago in real terms due to years of Tory austerity.

The Times reports almost four million workers could be hit by a freeze, while the Daily Mail reported five million could be affected.

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A Treasury source did not deny the claims, pointing to comments Mr Sunak made in July.

The Chancellor originally sparked fears of a raid on public sector pay in July when he launched the spending review.

At the time, he warned public sector pay would need to keep "parity" with private sector wages – which were feared to have tumbled in the pandemic.

The Chancellor wrote: "In the interest of fairness we must exercise restraint in future public sector pay awards, ensuring that, across this year and the spending review period, public sector pay levels retain parity with the private sector."

The Office for National Statistics (ONS) said borrowing for the first seven months of the financial year is now estimated at £214.9 billion – the highest in any April to October period since records began in 1993.

October borrowing, excluding state-owned banks, was also a record and marked a £10.8 billion increase year-on-year.

General government net borrowing in the first seven months of this financial year (April to October 2020) is estimated to have been around 9.9% GDP, the ONS said.

The state borrowed £22.3 billion in October 2020, £10.8 billion more than in October 2019. The figure is the highest October borrowing and the sixth-highest borrowing in any month since monthly records began in 1993.

And borrowing in November could be even higher after the Chancellor implemented a national lockdown for England and reinstated the full furlough scheme.

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