Home Business NewsBusiness Government borrowing ticks up more than expected thanks to energy help, benefit payments and debt interest

Government borrowing ticks up more than expected thanks to energy help, benefit payments and debt interest

by LLB Reporter
23rd May 23 10:00 am

Borrowing in April stood at £25.6 billion – the second highest April borrowing since records began.

A total of £3.9 billion was spent on subsidies – primarily energy support and the cost of benefits rose £4.5 billion thanks to inflation linked uprating and cost of living payments.

Debt interest was £3.1 billion higher than previous April and the highest April figure since records began.

 Danni Hewson, head of financial analysis at AJ Bell, comments on the latest public sector finances: “The impact of changing policy and raging inflation have fed into the amount of cash that the government had to borrow to cover costs in April.

“Billions of pounds were spent protecting the British public from the worst impact of sky-high energy prices and additional cost of living payments to those struggling the most, as prices on essentials like food continued to rise.

“Benefits were uprated by a whopping 10.1%, increasing the pressure on the public purse, but not doing enough to really help families who found the increase swallowed up by those continued price pressures.

“At the same time more money needed to be found to help households deal with inflation, the government was dealing with its own inflationary pain as the interest due on all that previous borrowing which shot up during Covid was itself supercharged by index linked gilts.

“There were a few notable quirks in this set of figures. Firstly, the abolition of Rishi Sunak’s Health and Social Care Levy took a bite out of the amount of tax coming into the treasury to the tune of £1.3 billion – one reason the now PM might be wishing his predecessor hadn’t taken a red pen to his work.

“Many of us will remember with longing those lovely one-off council tax rebates which helped mitigate some of last year’s price shocks – the decision not to repeat the process has ultimately saved the taxpayer a serious chunk of cash.

“With public sector debt now topping off at 99.2% it’s not surprising that the Chancellor has issued some stern words this morning about the need for difficult decisions.

“Balancing the books will look a lot less challenging if tomorrow’s inflation numbers have indeed fallen below double digits. But the age-old problem of productivity has nestled into the country’s skin like a burr and achieving real growth looks as hard as it’s ever been.”

Leave a Comment

You may also like


Sign up to our daily news alerts

[ms-form id=1]