RISHI Sunak fired off a warning shot over continuing with huge government spending last night as Britain’s debt hit a whopping £2.2trillion.
The Chancellor said Britain must step up to keep debt under control and get our finances back on track amid growing tensions about ballooning splashing of taxpayers’ cash.
It came as former Tory Chancellor Ken Clarke warned ministers against splurging billions of pounds on a Royal yacht Britain couldn’t afford – and claimed higher taxes are needed to slash spiralling debt.
Ministers borrowed another £24.3billion in May, down from £43.8billion a year earlier at the height of the Covid pandemic, the Office for National Statistics said last night.
But the numbers were far less than feared as Britain opened up again and flooded back to shops, pubs and restaurants.
And tax receipts jumped from fuel and VAT as consumer spending showed signs of bouncing back.
The stats watchdog revised total borrowing down for the financial year by £1.1billion – but it’s still the highest level since the end of World War II, at 99 per cent of GDP.
A cautious Mr Sunak said last night: “As we emerge from the pandemic, we are continuing to support people and businesses to get back on their feet and our Plan for Jobs is working.
“It’s also important over the medium term to get the public finances on a sustainable footing.
“That’s why at the Budget in March I set out the difficult but necessary steps we are taking to keep debt under control in the years to come.” The latest debt stats raised fresh hope that the UK economy might escape the gloomy predictions of economists and bounce back by the end of the year.
Capital Economics said: “The strong economic recovery is starting to feed through into lower government borrowing.
“This reinforces our view that the tax hikes and spending cuts that most fear may be avoided.” But yesterday Conservative former chancellor Lord (Ken) Clarke said inflation is a “big risk” over the next few years and insisted Rishi will need to raise taxes to pay for his £300billion Covid spending spree.
He told BBC Radio 4: “You have got to start addressing the serious question of how do we pay for this fantastic amount of borrowing in a sensible and responsible way in order to be able to maintain fiscal discipline in future.” And he slammed the £200million ministers are spaffing on a new Royal yacht as a “complete waste of time” and “silly populist nonsense” that “we have no money” for.
He blasted: “£200 million is not going to cause problems, but it shows there are people in No 10 who just think there’s free money and who think that waving a Union Jack and sending yachts and aircraft carriers around the world shows what a great power we are.” Downing Street rejected the criticism last night and said the new flagship would “boost British trade and drive investment into our economy”.
And Matt Hancock insisted it would “more than pay for itself many, many times over” in terms of booting our trade.
The PM’s spokesman said: “We will set out the full cost in due course.”
