UK borrows another £14bn in May despite rising tax burden – as interest on £2.4TRILLION debt mountain hits £7.6bn a MONTH
The government borrowed another £14billion in May despite the rising tax burden, as inflation sent interest payments soaring.
The costs of servicing the near-£2.4trillion debt mountain surged to £7.6billion, a record for the month.
That helped offset the increase in income for the government from higher taxes.
Chancellor Rishi Sunak insisted the grim figures underlined the need to be ‘responsible with the public finances’ – as unions clamour for huge pay rises to deal with the surging cost of living.
There are worrying signs that the economy is on the verge of slipping into recession as the Ukraine crisis and Covid aftermath bites.
The Office for National Statistics (ONS) said Government borrowing in May was £4billion less the same month last year.
The costs of servicing the near-£2.4trillion debt mountain surged to £7.6billion, a record for the month
Chancellor Rishi Sunak insisted the grim figures underlined the need to be ‘responsible with the public finances’ – as unions clamour for huge pay rises to deal with the surging cost of living
But it was still the third-highest May borrowing since monthly records began in 1993 and £8.5billion more than in May 2019, before the pandemic struck.
The data revealed that surging levels of inflation sent interest payments on Government debt to a record-breaking £7.6billion – £3.1billion higher than a year earlier.
The ONS said the jump in UK debt interest payments is down to the recent surge in the Retail Prices Index (RPI) measure of inflation, which determines payouts on index-linked gilts.
So far this financial year, debt interest payments have totalled £14.1 billion, up £4.7 billion year-on-year, the ONS said.
June figures are expected to show the worst of the impact of inflation on Government debt interest payments, with the Office for Budget Responsibility (OBR) forecasting £19.7 billion – the biggest on record by far.
Mr Sunak said: ‘Rising inflation and increasing debt interest costs pose a challenge for the public finances, as they do for family budgets.
‘That is why we are taking a balanced approach – using our fiscal firepower to provide targeted help with the cost of living, while remaining on track to get debt down.
‘Being responsible with the public finances now will mean future generations aren’t burdened with even higher debt repayments, and we can secure our economy for the long term.’
The debt interest helped offset the increase in income for the government from higher taxes
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