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UK's government debt

 The cost of government borrowing has risen to its highest level for September since records began, putting pressure on the new prime minister to bring down public debt. As a result, interest payments on government debt rose by 48 per cent to £7.7 billion, up by 2.5 billion from the same month last year to record its highest level for September since monthly records began in 1997. The jump in interest payments is mainly because of the impact of inflation, as measured by the retail prices index, on index-linked gilts, which comprise about a quarter of the government’s gilt portfolio. RPI hit 12.6 per cent last month.


Public sector net borrowing, the difference between what the government spends and what it receives in taxes, continued to exceed forecasts made in May by the Office for Budget Responsibility, the official forecaster, rising to £20 billion in September. This represents an overshoot of more than £5 billion. Economists had forecast borrowing of £17.2 billion. The £2.2 billion rise in net borrowing from the same month last year reflects the £900 million cost of the energy bill support payments made to people on disability benefits and £360 million given to families receiving tax credits, alongside the continued pressure on debt interest payments from inflation.

The government is in turmoil after the shortest premiership in history ended yesterday when Liz Truss resigned after six weeks in office. She has promised that a new party leader will be selected through an accelerated leadership race to conclude a week today, October 28. Her second chancellor, Jeremy Hunt, has said that he will announce plans to reign in spending and increase taxes to boost government coffers and keep the markets on the side on October 31 if he remains in office under the new leader. However, a new prime minister will likely delay the announcement of plans to fill the hole in the public finances.

Experts have warned that the government must find a way to raise at least another £28 billion to meet its fiscal mandate and get debt falling as a share of GDP in three years.

www.sba.tax

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  1. Marshall24 October 2022 at 00:04

    Isn't it interesting that even though Liz Truss was in office for just 45 days she will still receive 115,000 pounds, yearly, until her death? Why is she getting all this money for? She didn't do anything, at least not something good. And she was in office for such a short time. The UK needs to address such irrational "spendings". I mean is the UK rewarding such disasters?

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