UK government debt and deficit: March 2020

• General government gross debt was £1,877.5 billion at the end of the financial year ending March 2020, equivalent to 84.7% of gross domestic product (GDP) and 24.7 percentage points above the reference value of 60.0% set out in the protocol on the excessive deficit procedure.

• General government gross debt first exceeded the 60.0% Maastricht reference value at the end of the financial year ending March 2010, when it was 69.1% of GDP.

• General government deficit (or net borrowing) was £60.3 billion at the end of the financial year ending March 2020, equivalent to 2.7% of GDP and 0.3 percentage points below the reference value of 3.0% set out in the protocol on the excessive deficit procedure.

• This is the fourth consecutive financial year in which general government deficit has been below the 3.0% Maastricht reference value.

General government

UK general government consists of two sub-sectors: central government and local government.

Debt

Debt represents the cumulative amount the general government sector owes to organisations in other UK sectors and overseas institutions, which is largely a result of government financial liabilities on the bonds (gilts) and Treasury bills it has issued.

Deficit

Deficit (or net borrowing) measures the gap between total revenue and total spending. A positive value indicates borrowing, while a negative value indicates a surplus.

The UK government debt and deficit statistical bulletin is published quarterly in January, April, July and October each year. This is to coincide with when the UK and EU member states are required to report on their deficit (or net borrowing) and debt to the European Commission.

Coronavirus (COVID-19)

This bulletin reflects data up to and including March 2020 and so does not reflect the subsequent unprecedented impact of the pandemic on the UK’s debt and deficit.

Recent and upcoming changes to public sector finance statistics: May 2020 explains our provisional assessments of some of the largest coronavirus (COVID-19) schemes and the ongoing challenges we face in measuring the effects of the coronavirus pandemic on tax receipts.

Effects of the coronavirus pandemic recorded in this bulletin

On 19 March 2020, the UK government introduced its Coronavirus Job Retention Scheme (CJRS). This temporary scheme is designed to help employers pay the wages and salaries to those employees who would otherwise lose their jobs because of the pandemic. The provisional recording of the CJRS increased subsidies paid by central government by an estimated £2.5 billion in Quarter 1 (Jan to Mar) 2020 and so increased the deficit in that period by a corresponding amount.

Central government current grants paid to local government increased in Quarter 1 2020, primarily because of additional payments to assist with addressing the pandemic made in late March. We are not yet able to confirm when local government expenditure funded by these grants will take place.

Departure from the EU

As the UK leaves the EU, it is important that our statistics continue to be of high quality and are internationally comparable. During the transition period, those UK statistics that align with EU practice and rules will continue to do so in the same way as before 31 January 2020.

These statistics, and our sector classification process, draw on the European system of accounts - ESA 2010, the Manual on Government Deficit and Debt, and associated guides.

During the transition period until the end of 2020, the UK is continuing to send data to Eurostat. In publications, Eurostat will present data for the UK after, and separated from, the member states.

After the transition period, we will continue to produce our government finance statistics in line with the UK Statistics Authority’s Code of Practice for Statistics and in accordance with internationally agreed statistical guidance and standards.

To ensure comparability with other countries, the statistical aggregates within the UK government debt and deficit release will continue to be produced according to the existing definitions and standards until further notice or those standards are updated.

Revisions since previous publication

This is the first time that debt and deficit figures for the financial year ending March 2020 have been reported in this statistical bulletin series. It is the second time that debt and deficit figures for the full calendar year ending 2019 have been reported.

The revisions between releases are primarily the result of improved departmental (and other government bodies) data replacing previous estimates.

The Government deficit and debt return table presents the revisions to our main aggregates since the last publication of the government debt and deficit return, as reported to the European Commission in June 2020. These revisions are consistent with revisions incorporated within the Public sector finances statistical bulletin.

The public sector finances revisions policy provides information on when users of the statistics published in the Public sector finances and UK government debt and deficit statistical bulletins should expect to see methodological and data-related revisions.

The public sector finances methodological guide provides comprehensive contextual and methodological information concerning the monthly Public sector finances statistical bulletin and related publications, including this release.

The guide sets out the conceptual and fiscal policy context, identifies the main fiscal measures, and explains how these are derived and interrelated. Additionally, it details the data sources.

Information on strengths, limitations, appropriate uses, and how the data were created is available in the Public sector finances QMI.

Comparability with monthly public sector finances

The general government debt and deficit figures published in this statistical bulletin (for the time period 1997 onwards) are fully consistent with those published in the Public sector finances, UK: May 2020 statistical bulletin, published on 19 June 2020.

There are two main differences between the headline debt and deficit measures published in the public sector finances and those published in this bulletin.

First, this bulletin includes only the debt and deficit of central and local government bodies. The public sector finances’ measures also include the debt and deficit of other public sector bodies, including public non-financial corporations and the Bank of England.

Secondly, this bulletin reports gross debt, while the focus of the public sector finances is net debt. Gross debt represents only the financial liabilities (debt securities, loans and deposits) of central and local government, while net debt deducts any liquid assets (official reserve assets and other cash or cash-like assets) from these financial liabilities.

Comparability with EU member states

This release is fully consistent with the latest data transmission on UK government deficit (or net borrowing) and debt that the UK and each of the 27 EU member states are required to report quarterly to the European Commission.

Although the UK is no longer an EU member state, during the transition period, those UK statistics that align with EU practice and rules will continue to do so in the same way as before 31 January 2020.

Article 126 of the Treaty on the Functioning of the EU obliges member states to avoid excessive budgetary deficits.

The protocol on the excessive deficit procedure, annexed to the Maastricht Treaty, defines two criteria and reference values with which member states’ governments should comply. These are: a deficit (or net borrowing) to gross domestic product (GDP) ratio of 3% and a debt to GDP ratio of 60%.

The UK debt and deficit figures in this statistical bulletin will be published by Eurostat on 22 July 2020 in context with each of the 27 EU member states.

According to the latest published figures (23 April 2020), there were 11 member states in addition to the UK that had a gross debt that exceeded the 60% of GDP reference value at the end of December 2019.

The average gross debt as a percentage of GDP across all 27 member states at the end of December 2019 was 77.8%, exceeding the 60% of GDP reference value by 17.8 percentage points.