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Inflation pushes UK government interest costs to May record - Perthshire Chamber of Commerce

Inflation pushes UK government interest costs to May record

Surging inflation led interest payments on UK government debt to hit the highest amount for May on record.

Interest payments paid by the government for last month hit £7.6bn, up £3.1bn from a year earlier.

Government borrowing fell in May from a year earlier but still remained higher than pre-Covid levels.

Borrowing - the difference between spending and tax income - was £14bn, down £4bn from a year earlier, the Office for National Statistics said.

But the figure was still the third-highest May borrowing since monthly records began in 1993 and was also £3.7bn more than the Office for Budget Responsibility (OBR) had forecast.

The recent high levels of debt interest payments are largely a result of higher inflation, the ONS said.

This is due to the interest paid on government bonds rising in line with the Retail Prices Index measure of inflation, which hit almost 12% in May.

So far this financial year, interest payments have totalled £14.1bn, up £4.7bn year on year.

The ONS said May's figure was the third highest debt interest payment made by a government in any single month.

The OBR estimates that debt interest payments will cost the government £87.2bn over the financial year ending in March 2023.

FROM SCC NETWORK

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