An indirect cost of record public debt: crowding out market competition?

[by Peter Ormosi] When Rishi Sunak announced the fourth Covid related support package in October 2020, UK government debt had already been at the unprecedented level of £2 trillion, exceeding 100% of the country’s GDP for the first time since the 1960s. But whereas the main worry on Sunak’s mind right now must be the likely interest rates on the national debt, the related risks, and to keep finances flowing, one should not dismiss the importance of how high government debt is likely to affect the real economy. This short blog considers some little-discussed side-effects that could have a long-term impact on competition.