Government borrowing and debt: international comparisons

Summary

In 2017 UK government borrowing is forecast to be broadly similar to the average for advanced economies, as a % of GDP. The UK’s gross debt is forecast to be below the average for advanced economies as a % of GDP but its net debt is forecast to be above the average.

Overall government borrowing

The IMF forecast UK borrowing to be 2.9% of GDP in 2017. Amongst advanced economies, five are forecast higher borrowing as a % of GDP. These five include three G7 nations: Japan, United States and France. The IMF average for advanced economies is 2.7%.

Structural borrowing

Structural, or cyclically-adjusted, borrowing is that part of borrowing which is unrelated to the economic cycle.  It represents “underlying” borrowing or the element of borrowing which will remain even when economies move out of recession.  Structural borrowing cannot be measured directly but is estimated based on a judgement about how far the actual level of output differs from its trend level.  Making these estimates is by no means straightforward so estimates of the structural deficit must be treated with caution.

The IMF estimates that the UK’s structural deficit will be 2.8% of potential GDP in 2017. While only four countries have a larger forecast structural deficit than the UK’s, the UK’s structural deficit is broadly similar to the average for advanced economies.

Government gross debt

UK gross debt is forecast to reach 89.5% of GDP in 2017.  This is lower than the average amongst advanced economies of 105.3%. Japan’s gross debt is forecast to reach 240.3% of GDP in 2017.

Government net debt

The IMF estimates that UK net debt will be 80.5% of GDP in 2017.  This is higher than the average amongst advanced economies of 73.0%, but lower than the average amongst the G7 advanced economies of 83.7%. Japan’s net debt is forecast to be 111.2% of GDP and Portugal’s 121.1% in 2017.