UK debt surges from energy support and inflation, data shows
BRITISH state borrowing jumped last month on fallout from costly energy support and soaring inflation, official data showed on Tuesday (22).
Public sector net borrowing hit £13.5 billion in October, up from £9.2bn a year earlier, the Office for National Statistics said.
The government of prime minister Rishi Sunak has maintained household energy support measures introduced by his predecessor Liz Truss to cushion a cost-of-living crisis, as prices rocketed after key producer Russia’s invasion of Ukraine.
Decades-high inflation, fuelled largely by sky-high energy bills, also saw interest on debt repayments balloon last month.
“It is right that the government increased borrowing to support millions of businesses and families,” chancellor Jeremy Hunt said in response to the data.
“But to tackle inflation and ensure the economic stability needed for long-term growth, it is vital that we put the public finances back on a more sustainable path.”
Last week, Hunt hiked taxes and slashed spending to reverse Truss’s unfunded tax cuts that had sent the pound sliding and UK borrowing costs surging. The government also stated last week that the UK economy had fallen into a recession and would shrink 1.4 per cent next year.
The Organization for Economic Co-operation and Development was more positive, however, forecasting a contraction of 0.4 per cent in 2023. That would still be more than any of the world’s seven most advanced nations next year, the OECD added.
The organisation meanwhile took aim at the UK’s support efforts to cap energy bills, saying it would continue to push up inflation. “Better targeting of measures to cushion the impact of high energy prices would lower the budgetary cost, better preserve incentives to save energy, and reduce the pressure on demand at a time of high inflation.”