Official data shows that the UK borrowed more than expected in July, a stark reminder the difficult financial landscape the country’s next prime minister will inherit.
Data released by the Office for National Statistics (ONS) shows that public sector borrowing excluding state-owned banks stood at 4.944 billion pounds ($5.89 billion), well in excess of forecasts made by the governments own fiscal watchdog. The Office for Budget Responsibility (OBR) had said in March it expected a deficit of just 0.2 billion pounds in the month.
In July 2019, prior to the outbreak of the Covid-19 pandemic which prompted unprecedented government borrowing, public finances were in surplus by 0.9 billion pounds.
Over the first four months of the 2022/23 financial year, the UK borrowed 55.0 billion pounds, 12.1 billion pounds less than over the same period last year but 32.6 billion pounds more than in 2019. It was also about 3 billion pounds more than expected by the OBR in March.
The gap was reduced by a 5.0 billion-pound downward revision to the shortfall between April and June.
Rising inflation is adding to the government’s debt interest bills. The UK paid debt interest of 5.8 billion pounds in July, up 63% from July last year.
The ONS data showed overall central government spending in July was up by 4.6% compared with the same month last year while receipts rose by 8.4%. Over the April-July period, spending jumped 1.5% while receipts were up by 12.7%.