UK increases borrowing
2023.01.24 14:12
UK increases borrowing
By Ray Johnson
Budrigannews.com – Because of the high cost of energy support and the skyrocketing interest rates on debt that are linked to rising inflation, the government of Britain borrowed more money in December than in any month since monthly records began 30 years ago.
The public sector’s net borrowing in December, excluding state-owned banks, was 27.4 billion pounds ($33.97 billion), up from 10.7 billion pounds a year earlier, according to the ONS.
An economist survey conducted by Reuters had predicted borrowing of 17.75 billion pounds for December.
According to the ONS, the significant increase in borrowing in December was primarily attributable to an increase in debt interest rates and a sharp rise in spending on energy support programs.
According to Capital Economics economist Ruth Gregory, “Overall, today’s worse-than-expected public finances figures will only embolden the Chancellor in the Budget on March 15 to keep a tight grip on the public finances.”
She added that the finance minister Jeremy Hunt probably wouldn’t be able to announce tax cuts until closer to the next general election, which is expected to be in January 2025 at the latest.
Hunt stated in response to the data that it was essential for the government to maintain its objective of halving inflation, which most economists believe will occur naturally as a result of a base effect and lower energy costs.
The government paid 17.3 billion pounds in debt interest in December, the highest total since monthly records began, which reflects the impact of double-digit inflation on index-linked government bonds.
The Office for Budget Responsibility (OBR) predicted borrowing for December at 17.6 billion pounds, but borrowing in December was 9.8 billion pounds higher.
However, the OBR’s forecasts included a revaluation of student loans last year, which the ONS data have not yet reflected. This accounted for almost all of that difference.
Once more definitive estimates were available, the ONS stated that it would record the revaluation.
If student loans were taken into account in the same manner, an ONS statistician estimated that the actual gap between the ONS and OBR estimates was probably only about 1.2 billion pounds.
