Watchdog Warning As Sunak Stacks Debt

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The head of UK budget surveillance has warned Rishi Sunak of the risks of debt accumulation as he finalizes recovery measures for the coronaviruses to be announced this week.The intervention of Robert Chote, president of the Office for Budget Responsibility (OBR), comes as unprecedented state support – more than £ 132 billion to date – pushes the national debt as share of the economy at its highest level in nearly six decades. The borrowing frenzy was fueled by cheap credit, as interest rates plummeted to record levels.

But in a Sunday Telegraph interview Mr. Chote warned: “A sane government will not just see how good it is for governments to borrow today [but] what difficulties will be created if they become more expensive. ”

The OBR will issue its latest verdict on the long-term health of public finances on July 14. He will outline the outlook for the UK on the basis of a rapid recovery, a slower rebound with economic damage and the worst case scenario where the epidemic leaves deep economic scars.

Mr. Chote added: “We argued in the last fiscal risk report that public finances are more vulnerable to bad surprises in interest rates and inflation than they were because the debt stock is larger, but also due to quantitative factors. easing, which means that more of it was essentially refinanced at the Bank rate. “

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