borrowing – Hoang Viet

Oct 22 2024

Government borrowing remains at highest since pandemic | Business News

Government borrowing is at its highest since the pandemic due to public sector pay rises and the high cost of borrowing, official figures show.

Last month had the third highest September borrowing on record, coming only behind 2020 and 2021, according to data from the Office for National Statistics (ONS).

While more money came in from tax, it was outweighed by increased spending which the ONS said was partly due to higher interest rates on the debt and public sector pay rises.

Spending was £2.1bn higher in September than the same month a year ago, figures showed.

Public sector workers including teachers and junior doctors have accepted pay rises since Labour entered government in July while high interest rates set by the Bank of England to bring down inflation have made borrowing more expensive.

Money blog: Gold prices rocket to record high – why?

But the gap between what the government took in and what it spent was less than expected by some.

Economists polled by the Reuters news agency had anticipated public sector borrowing could have reached £17.5bn but was in fact £16.6bn. The sum excludes borrowing conducted by public sector banks.

Independent forecasters at the Office for Budget Responsibility (OBR), however, had not thought such a rise was likely. The numbers came in £1.5bn higher than it had forecast.

What are the government saying?

The chief secretary to the Treasury Darren Jones defended the pay rises by saying strikes would cost the economy more.

“Strikes cost at least £3bn last year, so it was the right thing to do to end those damaging disputes,” he said.

“We have inherited a £22bn black hole in the country’s public finances, including no plan to fund pay deals for millions of public sector workers… Resolving this blackhole at the budget next week will require difficult decisions to fix the foundations of our economy and begin delivering on the promise of change.”

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Oct 21 2022

Government borrowing leaps and retail sales drop by much more than expected | Business News

The latest official data on the state of the public finances and consumer spending makes for grim reading as the country awaits its next leader.

The Office for National Statistics (ONS) reported that public sector net borrowing came in at £20bn last month – £3bn more than economists had expected.

The report pointed to a record debt interest payment total of £7.7bn for the month of September – much of which could be attributed to rising inflation as payments are linked to the RPI measure.

Government spending increased by £5.8bn to £79.3bn as a result of the jump in interest, the ONS said.

It separately revealed that retail sales volumes fell 1.4% on the previous month.

That was far worse than the 0.5% decline that economists had forecast.

It was likely to reflect not only the deteriorating cost of living crisis that has squeezed consumer budgets this year but also the impact of store closures for the funeral of the Queen.

The figures were released against a growing backdrop of gloom for the economy – made worse in recent weeks by the market chaos that followed the government’s tax giveaway mini-budget in September.

While the measures have now been largely overturned by the new chancellor Jeremy Hunt, his medium-term fiscal plan due on Halloween will now fall under the oversight of a new PM following the resignation of the ill-fated mini-budget’s architect, Liz Truss.

The Tories expect their new leader to be in place in a week’s time – days before Mr Hunt is due to outline how he plans to balance the books while maintaining a measure of support for households and businesses at the same time.

A survey by the City watchdog found that almost 32 million people, or 60% of adults, were already finding it a heavy burden or somewhat of a burden to pay their bills because of the growing cost of living crisis.

The Financial Conduct Authority’s financial lives survey, which was taken between February and June, said the total was up six million from 2020, when the economy went into lockdown to fight the COVID-19 pandemic.

Another closely watched survey, compiled by GfK, found that confidence among British consumers remained close to the lowest level on record last month.

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