Government borrowing hits £4.9bn

Interest payments on Government debt jumped by almost 40 per cent last month as rocketing inflation continues to add to state borrowing, according to official data.

The Office for National Statistics (ONS) said Government borrowing hit £4.9 billion in July.

It is significantly ahead of the predictions of analysts, who had forecast £2.8bn in borrowing last month, and brings the total budget deficit for the year so far to £55bn.

Nevertheless, borrowing was £0.8bn below levels from the same month last year, but represented a £5.9bn surge from pre-pandemic levels in 2019, when the Government reported a surplus of £0.9bn.

It came as debt interest payments climbed to £5.8bn in July, lifting from £3.5 billion in the same month last year due to increases in Retail Price Index (RPI) inflation.

Earlier this week, the ONS revealed that RPI leapt to 12.3 per cent, while the broader Consumer Price Index (CPI) inflation figure hit a new 40-year-high of 10.1 per cent.

In response, Chancellor Nadhim Zahawi said: “I know that rising inflation is creating challenges for families and businesses, and it is also putting pressure on the public finances by pushing up the amount we spend on debt interest.

“To help people during this difficult time, Government support is continuing to arrive in the weeks and months ahead, targeted to those who need it most.”