The UK’s public borrowing rose to more than £27 billion last month, the highest level for December since modern records began 30 years ago, as a result of government payments to cushion the blow of skyrocketing energy costs.
According to the Office for National Statistics’ most recent report on the state of the UK’s finances, the government spent £27.4 billion more than it took in last month, which is £16.7 billion more than it borrowed in December 2021.
Based on the official data, tax receipts in December increased marginally from December 2021 to more than £74 billion, while energy support increased public spending by just over £9 billion.
Higher than anticipated interest payments of £17.3 billion on the UK’s $2 trillion plus national debt were also a factor in the actual borrowing amount, Said the ONS. The amount of debt interest payments was twice what it was in the same month last year.
Due to the shortfall in December, public borrowing for the first nine months of the 2022–23 fiscal year totaled £128.1 billion, which was £5 billion more than during the same period in 2021–22 but £2.7 billion less than the Office for Budget Responsibility’s prediction.
When the Treasury released its fall statement in November, the OBR predicted that total government borrowing for the 2022–23 fiscal year would reach £177 billion, an increase of about £49 billion from the year before.
“Right now we are helping millions of people with the expense of living, but we must also ensure that our level of debt is fair for future generations,” said Jeremy Hunt, chancellor of the exchequer.
It was the third month in a row that borrowing was greater than the same month a year earlier, according to Ruth Gregory, a UK analyst at Capital Economics. Gregory stated that “December’s public finances numbers supplied fresh evidence that the government’s fiscal situation is rapidly deteriorating.”
Overall, today’s worse-than-expected public finances numbers will only encourage the chancellor to keep a tight rein on the public finances and cause him to delay announcing any major tax cuts until closer to the next general election, maybe in 2024.
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