UK vows to cut debt as interest bill pushes government borrowing to £20bn

The UK government has pledged to do “whatever it takes” to reduce debt after public sector borrowing hit £20bn ($22bn) last month due to higher debt interest payments.

According to the latest data from the Office for National Statistics (ONS), net public sector borrowing in the UK stood at £20bn in September 2022, £2.2bn more than in the same month last year.

According to the ONS, this was the second highest September borrowing since monthly records began in 1993. The only instance of an increase in borrowing was his September 2020 at the height of the COVID-19 pandemic.

Commenting on the latest numbers, Treasury Secretary Jeremy Hunt said: In order to stabilize the market, we have made it clear that protecting our finances means difficult decisions lie ahead.

“In the medium term, we will do whatever it takes to reduce debt and ensure taxpayer money is well spent, putting our finances on a sustainable path while growing our economy.”

soaring debt interest

Borrowings exceeded economists’ forecasts in September at £17bn, well above the £14.8bn estimated by the Office of Budget and Responsibility (OBR) in March.

The increase in borrowing was driven by government debt interest payments of £7.7bn in the month, reflecting an increase of £2.5bn compared to the same month in 2021.

According to the ONS, interest payment volatility is primarily due to the impact of changes in the retail price index (RPI) on index-linked gold coins. His RPI inflation rate for September he rose to 12.6%.

financial plan

PwC economist Jake Finney said the government should consider further tax increases and public spending cuts.

“Public sector debt as a percentage of GDP is now at 98%, the highest level since the early 1960s. I have to make an announcement,” he said.

The announcement of the loan amount in September prompted the opposition Labor Party to renew its call for an immediate general election.

Shadow Chancellor’s Rachel Reeves said the Conservatives had “wounded an enormous amount of damage”.

“Financial market volatility is increasing not only the cost of borrowing for governments, but also the cost of borrowing for homeowners,” she said.

A new Conservative prime minister, or another new prime minister, “is not going to provide the country with the leadership and stability we so desperately need,” she added.

PA Media contributed to this report.

Alexander Chan