UK Public Debt Rises to Highest Since 1961 Ahead of Election

Public sector net debt, excluding state-controlled banks, reached 2.742 trillion pounds ($3.47 trillion) or 99.8% of annual gross domestic product in May. (Reuters)
Public sector net debt, excluding state-controlled banks, reached 2.742 trillion pounds ($3.47 trillion) or 99.8% of annual gross domestic product in May. (Reuters)
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UK Public Debt Rises to Highest Since 1961 Ahead of Election

Public sector net debt, excluding state-controlled banks, reached 2.742 trillion pounds ($3.47 trillion) or 99.8% of annual gross domestic product in May. (Reuters)
Public sector net debt, excluding state-controlled banks, reached 2.742 trillion pounds ($3.47 trillion) or 99.8% of annual gross domestic product in May. (Reuters)

British public debt rose last month to its highest as a share of the economy since 1961, data showed on Friday, adding to the financial challenges the next government will face as soon as it comes to power after a general election in two weeks' time.

Public sector net debt, excluding state-controlled banks, reached 2.742 trillion pounds ($3.47 trillion) or 99.8% of annual gross domestic product in May, up from 96.1% a year earlier, the Office for National Statistics said.

The increase came despite slightly lower-than-expected government borrowing in May, which stood at 15.0 billion pounds compared with economists' median forecast of 15.7 billion pounds in a Reuters poll.

Britain looks headed for a change of government following an election on July 4, as Keir Starmer's Labour Party is far ahead of Prime Minister Rishi Sunak's Conservatives in the polls.

Public debt soared in Britain during the COVID-19 pandemic, and the public finances have also been hit by slow growth and a rise in the Bank of England's interest rates to a 16-year high.

Most other Western countries saw big increases in debt over the same period, and British debt levels are below those in the United States, France and Italy.

Borrowing in Britain totaled 33.5 billion pounds in the first two months of the financial year, 0.4 billion more than the same period in 2023, but 1.5 billion pounds less than government budget forecasts had predicted in March.

Consultants at Capital Economics said these lower-than-expected borrowing numbers reflected less public investment, and would offer scant comfort to Britain's next finance minister.

"They do little to reduce the scale of the fiscal challenge that awaits them, in part because of the upward pressure on the debt interest bill from higher interest rates," said Alex Kerr, assistant economist at Capital Economics.

Labour and the Conservatives intend to stick with existing budget rules which require official forecasts - last updated in March - to show that debt as a share of GDP is falling in the fifth year of the forecast.

Higher interest rates than were forecast in March's budget meant Britain's next chancellor now had just 8.5 billion pounds of leeway to meet these rules, down from the historically low 8.9 billion in March, Kerr said.

Both Labour and the Conservatives have pledged not to raise the rate of income tax, value-added tax or other major levies, but government budget forecasts in March showed tax as a share of GDP was on track to reach its highest since 1948.



Schengen Visa Applications in Saudi Arabia Grew by 23% in 2024

Visa applicants are seen at the Visa Center in Riyadh to complete their application procedures. (Asharq Al-Awsat)
Visa applicants are seen at the Visa Center in Riyadh to complete their application procedures. (Asharq Al-Awsat)
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Schengen Visa Applications in Saudi Arabia Grew by 23% in 2024

Visa applicants are seen at the Visa Center in Riyadh to complete their application procedures. (Asharq Al-Awsat)
Visa applicants are seen at the Visa Center in Riyadh to complete their application procedures. (Asharq Al-Awsat)

As travel and tourism continue to grow, despite the challenges faced by local, regional, and international businesses and projects, VFS Global has revealed that demand for Schengen visas in Saudi Arabia has increased significantly by 23% this year.

In an interview with Asharq Al-Awsat, Zubin Karkaria, founder and CEO of VFS Global, said that the company has managed the visa procedures for the Saudi Ministry of Tourism’s Trailblazers program, which works to send 100,000 students to Europe for training in the tourism and travel sectors.

He added: “Our strategy aims to provide long-term value to all stakeholders, including the Saudi government and its citizens, contributing to Saudi Arabia’s vision of creating a diverse and sustainable economy by applying some of our modern solutions to our operations in the Kingdom.”

Karkaria emphasized that Saudi Arabia is a key market for VFS Global’s business, noting that the company has expanded its presence and services in the Kingdom over the years through strategic partnerships to facilitate visa services for travelers. These partnerships include agreements with chambers of commerce, the Public Investment Fund (PIF), and Aramco.

He further stated: “VFS Global strictly adheres to service-level agreements with its government clients, managing non-judicial and administrative tasks related to visa applications, passports, and consular services.”

As international travel grows in emerging markets, there has been an increasing need for specialized services to meet the demands of governments and visa applicants globally. “This led us to develop an approach that benefits both parties, where we handle all administrative procedures necessary for visa processing,” Karkaria explained.

According to him, VFS Global enjoys a long-standing partnership with governments in the European Union, working closely with them in the countries where they operate to provide visa application services. He noted the ongoing rise in demand for international travel and visa issuance.

“The initial challenge during the COVID-19 pandemic, which directly impacted travel and related sectors, was dealing with the volatile business environment. We quickly recognized both the severity of the crisis and the opportunity to transform our operations to prepare our organization for the future,” he said.

He continued: “For instance, by April 2020, 3,196 of our 3,384 visa application centers worldwide were temporarily closed in response to the global crisis. However, within just seven months, we resumed operations at 1,600 centers, representing more than half of our global network, enabling us to serve over 50 government clients across 129 countries while implementing new health and safety measures to protect both staff and visa applicants.”

Karkaria said that over the past 23 years, the company played a critical role in helping its clients manage the rapid growth in visa demand in a cost-effective and highly secure manner.

He added: “We have also developed innovative solutions tailored to our government clients, such as LIDProTM, which allows them to process visa applications from multiple locations via a centralized electronic hub.” VFS Global is the trusted partner of 67 government clients and operates in 151 countries.

Karkaria stated that the company supports travel to the Kingdom by providing Saudi visa services since 2023.

“Through our partnership with the Saudi Visa and Travel Solutions company, we operate and manage Saudi visa service centers in 45 countries worldwide,” he told Asharq Al-Awsat.

He added: “We are committed to supporting Saudi Arabia’s ambitious plans to develop and grow tourism by expanding Saudi visa services in partnership with the Saudi Visa and Travel Solutions company. We are also in the process of appointing relationship managers for key government and private sector entities.”

Karkaria noted that Saudi Arabia has recently launched an educational visa to boost the education sector by supporting international institutions in establishing branches in the Kingdom and attracting international students to study and reside in the country.

In this context, VFS Global will help international institutions establish branches in Saudi Arabia and assist potential Saudi students in pursuing their careers at various international universities through professional guidance and recruitment services.

VFS Global established its visa application center operations in Saudi Arabia in 2005, providing visa and passport services on behalf of 31 governments through a network of 95 visa application centers.

The company operates in 14 locations across Saudi Arabia, including Riyadh, Jeddah, Khobar, Abha, Hail, Jubail, Makkah, Jazan, Qassim, Al-Kharj, Tabuk, Madinah, Najran, and Al-Jawf.

Karkaria stated, “We see tremendous potential in artificial intelligence to accelerate and improve visa application procedures. Our partnership with the Responsible AI Institute reflects our strong commitment to using this technology in a reliable and ethical manner, applying the highest security standards.”

“Most importantly, we are committed to using AI in accordance with the regulations and procedures implemented by the governments we work with. We are ready to help our government clients integrate AI into the visa application process,” he added.