UK Fiscal Position Worsens as Borrowing Costs Rocket

The news will put further pressure on chancellor Jeremy Hunt to convince the UK's lenders that he has a tight grip on government spending 

Alliance News 24 January, 2023 | 9:42AM
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Levelling up

UK public borrowing continued at record levels in December, according to the Office for National Statistics (ONS).

In the final month of 2022 UK public sector borrowing – excluding public sector banks  reached its highest December figure since monthly records began in 1993, the ONS said.

Borrowing hit £27.4 billion, which was £16.7 billion higher than the previous year, and £9.8 billion higher than the latest official forecast from the Office for Budget Responsibility.

The increase was largely due to a sharp rise in the spend for energy support schemes, as well as an increase in debt interest.

In the third payment of the Energy Bill Support Scheme, the central government paid out £1.9 billion to households to provide support with the cost of energy bills. There will be a further three monthly payments until the end of the scheme in March.

The interest payable on central government debt also reached a record for December, hitting £17.3 billion. This was the second largest of any single month, trailing only the £20.0 billion recorded back in June 2022.

"Since mid-2021, the cost of servicing central government debt has increased considerably," the ONS said.

"The recent high levels of debt interest payable are largely a result of higher inflation, with the interest payable on index-linked gilts rising in line with the retail prices index."

Of the total sum, £13.7 billion reflects the impact of inflation on index-linked gilt stock, the body said.

By Elizabeth Winter, Alliance News senior markets reporter

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