High inflation helps to swell UK budget deficit in April
2023.05.23 03:00
© Reuters. FILE PHOTO: A man wearing a face mask walks along the River Mersey with the Liverpool skyline amid the outbreak of the coronavirus disease (COVID-19) in Seacombe, Britain, October 12, 2020. REUTERS/Phil Noble
By Andy Bruce
LONDON (Reuters) -Britain recorded a larger-than-expected budget deficit in April, as interest accrued on inflation-linked government bonds pushed the debt interest bill for the month to a new record, official data showed on Tuesday.
Public sector net borrowing, excluding state-owned banks, rose in April to 25.56 billion pounds ($32.26 billion), the Office for National Statistics said.
A Reuters poll of economists had pointed to public sector net borrowing, excluding state-owned banks, of 19.75 billion pounds.
In April, Britain added 9.8 billion pounds to its debt interest bill – the highest total for the month since comparable records started in 1993 and largely reflecting interest payable on inflation-linked government bonds.
Britain’s rate of consumer price inflation was the highest in Western Europe in March, remaining above 10%. Data on Wednesday are expected to a show a sharp drop in April, to around 8.2%, according to the Reuters poll consensus.
The ONS revised down its estimate for the budget deficit in the 2022/23 financial year that ended in March to 137.1 billion pounds, from 139.2 billion pounds previously.
In March the Office for Budget Responsibility forecast that borrowing in 2022/23 would settle at 152.4 billion pounds, 15.3 billion pounds more than the ONS estimate.
“Debt and borrowing remain too high now – which is why it’s one of our priorities to get debt falling,” finance minister Jeremy Hunt said in response to the data.
($1 = 0.7923 pounds)
