UK Public Borrowing

Pound Sterling climbed against the Dollar, Euro and a selection of other currencies on Tuesday after Office for National Statistics (ONS) figures painted a less bleak picture of the public finances for the recent month and in turn led economists to contemplate how the government might respond to any calls for tax cuts in the Autumn budget. 

Government borrowing rose by just less than one percent of economic output in September, according to Office for National Statistics data released on Friday, although some economists say the data was not quite as bad as it appeared. 

The dramatic plunge in sterling and UK gilt prices following Kwarteng’s unsupported tax cuts announcement drew many to radical conclusions.

UK inflation could be around five percent higher than otherwise from April 2023 if the latest Chancellor's plan to means-test access to the government's Energy Price Guarantee goes ahead, according to Pantheon Macroeconomics, as this would see further price increases passed on to households.

A boost to the government's tax intake won't sway Chancellor Rishi Sunak from his quest to cut the budget deficit as he will be wary of stoking inflation and maintaining his credentials as a truly conservative Chancellor.

The latest set of government spending and borrowing data from the ONS was not as cheery as some economists had expected, largely because the cost of servicing debt is rising rapidly in line with surging inflation.

The UK borrowed more than economists expected in September as the government added to its growing debt pile, however borrowing for the current financial year is still far below the levels forecast by the Office for Budget Responsibility.

Public Sector Net Borrowing for April came in at £31.7BN, an increase on the £28BN borrowed in March but below economist estimates for a reading of £32BN.

The UK's public sector spending deficit in 2020/21 stood at £303BN according to new data released by the ONS on Friday, which amounts to 14.5% of GDP and is a new post-war record.

Government borrowing in February was £19.1BN which is below the market consensus expectation for a more sizeable £21.4BN, suggesting the government is on course to undershoot borrowing forecasts set out in the March budget.

UK retail sales were little changed in December after an anticipated rebound failed to materialise and government borrowing surged ahead of the festive holidays in what economists say should be taken by Chancellor Rishi Sunak as a warning against any tax rises in the March budget. 

Britain's economy received its own shot in the arm this week when the ball began rolling on a global coronavirus vaccination programme, although the economy's recovery could be cut short if HM Treasury concerns about the budget deficit lead to an unnecessary return of austerity. 

The UK will inherit a larger 'structural' long-term fiscal deficit owing to the covid-19 crisis, but economists warn that the government risks a major policy error if it tries to eliminate the deficit too soon.

The government will 'front load' its fiscal tightening over coming months as it scrambles to try and plug the growing hole in its finances, according to economists who have reacted to news that shows an additional £21BN were borrowed in October.

The ONS reports the UK's debt pile expanded by a further £36.1BN in September 2020 as the UK Government borrowed significant amounts to fund the associated costs of locking down the country to try and prevent the spread of covid-19.

The government borrowed £35.9BN from financial markets in August as it continues to count the cost of staving off an economic meltdown due to the lockdown and restrictions it has introduced to try and stem the spread of covid-19.

Public debt surpassed £2 trillion in the UK during July even as borrowing came in below market expectations, leaving the government on course for a record deficit that economists say could constrain Chancellor Rishi Sunak's ability to assist the economy in the autumn budget. 

Chancellor Rishi Sunak launched 2020's comprehensive spending review Tuesday, which is expected to see the government make good on a range of past commitments but will underline the goliathan task ahead of HM Treasury if it's to return the public finances to a sustainable footing. 

The UK's debt at the end of May 2020 was 100.9% of gross domestic product (GDP), the first time that debt as a percentage of GDP has exceeded 100% since the financial year ending March 1963, says the ONS.

The UK's public finances recorded their largest-ever January surplus, in what amounts to a welcome boost to the Chancellor of the Exchequer Philip Hammond mere weeks ahead of Brexit.