The UK Office for National Statistics said that net public sector debt (excluding state-owned banks) reached £2.742 trillion ($3.47 trillion), or 99.8% of the UK's annual gross domestic product (GDP) in May, compared with 96.1% a year earlier.

People outside the Palace of Westminster, London, England. Photo source: Bloomberg

The rise in UK public debt came despite the government borrowing falling less than expected in May, at £15 billion compared to the £15.7 billion forecast by economists in a Reuters poll.

Public debt has surged in the UK since the Covid-19 pandemic, while the country's public finances have been hit by a slowing economy and record-high interest rates from the Bank of England. However, most other Western countries have seen debt levels rise sharply since the pandemic, and the UK's public debt is now lower than those of the US, France and Italy.

The Office for National Statistics report also said that total UK government borrowing reached £33.5 billion in the first two months of the 2024 financial year, £0.4 billion more than the same period in 2023, but £1.5 billion less than the government's budget forecast in March.

Speaking to Reuters, Alex Kerr, a representative of the research company Capital Economics, said that this level of public debt reflected a decline in public investment, and would bring many difficulties to the next British Government. Explaining this, Mr. Alex Kerr said: "The next government will not be able to do much to reduce the financial challenges that await them, partly due to the pressure from the increasing interest rates on government loans."

Britain is set to see a change of government after the July 4 election, with the Labour Party led by Keir Starmer dominating the Conservative Party of Prime Minister Rishi Sunak, according to polls.

Both Labour and the Conservatives are expected to stick to current budget rules, which would reduce the debt-to-GDP ratio. Both parties have also pledged not to raise income tax, VAT or other major taxes, but the government's March budget forecasts show that tax receipts are on track to hit their highest level since 1948.