Public sector net debt near £3 trillion, around 94% of GDP
The UK government borrowed £18.3bn in August, £2.9bn more than in the same month a year earlier, as spending rose faster than government income, according to public finances data released by the Office for National Statistics. The figure exceeded both the Office for Budget Responsibility’s forecast for August and the £15.6bn projection from City economists, and pushed cumulative borrowing for the financial year so far £8.1bn above the OBR’s projections. The Guardian described the borrowing overshoot as “a headache” for Chancellor John Healey as he works on next month’s budget, with recent bond market turmoil having eaten into the government’s “headroom” to keep within its fiscal rules.
Joe Nellis, emeritus professor and head of economic research at accountancy and advisory firm MHA, described the August data as “another reminder of the fiscal straightjacket facing the Government.” Nellis said the weakness in the public finances “lies mainly on the expenditure side,” with higher inflation driving up spending on public-sector pay, state benefits and pensions. “And last week’s announcement that inflation has hit 3.1% will not have helped,” Nellis added.
The cost of servicing the national debt remains exceptionally high. Public sector net debt stood just below £3 trillion, representing approximately 94% of GDP — the highest level since the early 1960s, according to the ONS data.
Tuesday’s economic calendar includes a UK Treasury Gilt 2032 auction at 10am, the CBI industrial trends report at 11am, and a eurozone consumer confidence report at 3pm.