Rising inflation drives debt to an all-time high
Soaring inflation led to interest payments on Government debt rising to the highest level since records began nearly 25 years ago.
Interest payments reached £6.1bn in January compared to just £1.6billion in the same month a year ago as inflation used on Government debt payments hit 7.8%.
The latest rise in interest rate payments comes as the Office for National Statistics (ONS) revealed that tax returns brought in £18.4bn in January, compared with £16.4bn in January 2021.
Increases in the tax take helped borrowing levels swing to a surplus of £2.9bn, compared to a deficit of £2.5bn a year earlier.
This was above expectations but remains £7 billion below the surplus recorded in January 2020 before the pandemic.
Public sector borrowing from the end of March to December was £138.5bn – the second highest since records began in 1993.
The data also showed that public sector debt, excluding public sector banks, was £2.32trillion at the end of the month, or around 94.9% of gross domestic product (GDP).
Chancellor Rishi Sunak said: "We provided unprecedented support throughout the pandemic to protect families and businesses and it has worked."
James Smith, research director at the Resolution
Foundation, said tax receipts this year so far are more than £25bn higher than forecast.
He added: "There are some signs of faster earnings growth for higher earners, who pay a higher marginal rate of tax. The warning in an otherwise welcome set of figures is the £6.1bn increase in debt repayments stemming from higher inflation."