UK government borrowing in the financial year to July exceeded the official estimate as higher inflation lifted the cost of servicing government debt, the Office for Budget Responsibility said Friday.
Borrowing excluding public sector banks was GBP 55.0 billion in the four months to July period compared to a GBP 52 billion borrowing forecast by the Office for Budget Responsibility.
The interest payment on the central government debt has increased as a result of higher inflation, with the interest payable on index-linked gilts rising in line with the Retail Prices Index.
In the financial year to July, interest payments surged 80.5 percent from the last year. Current expenditure grew only 1.5 percent due to the reduction in subsidy payments. Total current receipts climbed notably by 12.7 percent.
The interest payable on central government debt was GBP 5.8 billion in July, with GBP 4.0 billion of this GBP 5.8 billion cost reflecting the impact of the RPI.
The OBR estimated that the debt interest payable on central government’s outstanding debt will be GBP 87.2 billion for the current financial year.
Public sector net debt excluding public sector banks was GBP 2,388.1 billion at the end of July 2022, or around 95.5 percent of gross domestic product. Debt has reached levels last seen in the early 1960s.
In July, public sector net borrowing excluding public sector banks decreased by GBP 0.8 billion to GBP 4.9 billion. But this was GBP 5.9 billion more than in pre-coronavirus period, which was in surplus by GBP 0.9 billion.
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