Chief Secretary to the Treasury Darren Jones stated that the government must make “tough decisions” because of the £22bn black hole it inherited.
This comment comes in response to the Public Sector Finances release for August 2024, which isn’t a sight for sore eyes. Earlier this month, Jones commented on “sky-high inflation” and now his focus has turned to debt.
Debt interest costs reached 4.4% of GDP in 2022/23, a level not seen since 1948. In 2023/24, these costs amounted to £106.7bn.
If debt interest payments were considered a government department, its budget would be the second largest, surpassed only by the Department of Health and Social Care.
True to political form, Jones pointed the finger at his predecessors when addressing who was responsible.
Jones, commented: “When we came into office, we inherited an economy that wasn’t working for working people. Today’s data shows the highest August borrowing on record, outside the pandemic. Debt is 100% of GDP, the highest level since the 1960s.
“Because of the £22bn black hole in our public finances we have inherited this year alone, we are now taking the tough decisions now to fix the foundations of our economy, so we can rebuild Britain and make every part of the country better off.”
Even truer to political form, Jones didn’t mention how the government plans to “fix the foundations” of the economy – a line he used in comments about inflation earlier this month.
“Years of sky-high inflation have taken their toll; and prices are still much higher than four years ago,” he said.
“So, while more manageable inflation is welcome, we know that millions of families across Britain are struggling, which is why we are determined to fix the foundations of our economy so we can rebuild Britain and make every part of the country better off.”
What role could fintech play?
Although the Chief Secretary to the Treasury hasn’t mentioned the work the government is doing, there are developments underway.
Most recently, Chancellor Rachel Reeves announced at the start of this month that Amazon Web Services will invest £8bn in the UK, a move expected to create thousands of jobs across the country.
While Chancellor Reeves noted that this investment won’t lead to immediate changes, it is expected to boost the UK’s GDP, with Amazon Web Services estimating a £14bn contribution to the economy between 2024 and 2028.
Furthermore, the government has made its intentions clear when it comes to emerging technologies such as Artificial Intelligence (AI) and Open Banking.
September has been a significant month for the government, as Lord Chancellor Shabana Mahmood signed the first international treaty that legally regulates the safe use of AI. This landmark agreement establishes strict guidelines for monitoring AI development and managing its use.
The treaty includes safeguards to protect public welfare, data privacy, human rights, democracy, and the rule of law. It also requires countries to act against any misuse of AI that threatens public services or poses societal risks.
Signed by the Council of Europe, this is the first legally binding international agreement on AI, aiming to create a unified global framework for managing the technology’s risks in line with shared values. Non-member countries like the US and Australia are also being invited to join as signatories.
The UK Government also introduced the Digital Information and Smart Data Bill, focusing on legislation for digital identification, in July. These Smart Data schemes, inspired by Open Banking, hope to empower consumers and stimulate economic growth through informed choices and business innovation.
Many stakeholders and experts in the payments and technology sectors have praised recent advancements. Developing these technologies, and the regulations governing them, will not be a quick tsk, however. As Chris Michael, CEO and Co-founder of Ozone API, noted: “There’s still a long way to go.”
