The government’s interest payments more than doubled as the government racked up another £18.8billion of borrowing last month.
The cost of servicing the debt mountain hit £5.6billion in October, up from just £1.8billion in the same month of 2020.
Although the bill remains relatively low, it highlights the UK’s financial vulnerability following the pandemic.
Inflation could further drive up government and interest rate costs.
According to the Office for National Statistics, the pace of borrowing reduction after crisis was dramatic.
The number for October was just £200million less than recorded a year ago, when the country was still under restrictions, and the second highest on record for the month.
Borrowing so far this financial year has been £127.3billion – £103.4billion less than the same period a year ago, as Covid-19 support packages wound down and the economy recovered.
Government borrowing in October was £18.8billion just £200million less than recorded a year ago, when the country was still under restrictions
The cost of servicing the debt mountain hit £5.6billion in October, up from just £1.8billion in the same month of 2020
Public sector net debt was £2.28trillion at the end of last month – or around 95.1 per cent of gross domestic product (GDP) – maintaining levels not seen since the early 1960s.
Central Government receipts stood at £65.5billion, up £3.8billion on October 2020, whilst central Government bodies spent £78.8billion – up £1.5billion from a year ago.
Rishi Sunak, Chancellor of India stated that while the government provided unprecedented support during the pandemic, it also saved millions of jobs and companies. However, the debt we owe to the country is much greater.
‘It is right that we now strengthen our public finances for future generations – so at the Budget last month I set out new fiscal rules which will keep debt on a sustainable path in the years to come.’
Samuel Tombs (chief UK economist, Pantheon Macroeconomics) pointed out, “Public borrowing has fallen much slower than in previous years. This is due to the slowing economy and the pick up inflation. Which determines interest payments for index-linked gilts.
‘Borrowing was just £0.2billion lower than a year ago in October, compared to a drop of £8.2billion in September and an average decline of £17.2billion in the first half of this fiscal year.’