Business

New economic questions for Truss as Government’s debt interest bill hits record £8.2b

L

iz Truss was facing growing questions over her tax-cutting economic strategy on Wednesday as the Government’s debt interest bill soared to a record £8.2 billion in August, according to official figures.

The Office for National Statistics said central government debt interest payable was £8.2 billion in August 2022, £1.5 billion more than in August 2021 and the highest August figure since monthly records began in April 1997.

It stressed that the volatility in interest payable was largely due to sky-rocketing inflation on index-linked gilts.

Ms Truss is gambling with her dash for economic growth that the markets will not go wobbly on Britain if she is seen as borrowing too much.

Responding to the latest figures, Chancellor Kwasi Kwarteng said: “Our priority is to grow the economy and improve living standards for everyone – with strong economic growth and sustainable public finances going hand in hand.

“As Chancellor, I have pledged to get debt down in the medium term. However, in the face of a major economic shock, it is absolutely right that the government takes action now to help families and businesses, just as we did during the pandemic.”

The ONS figures also showed that public sector net debt, excluding public sector banks, was a staggering £2,427.5 billion at the end of August 2022, or around 96.6 per cent of gross domestic product (GDP).

This was an increase of £195.2 billion or 1.9 percentage points of GDP compared with August 2021.

Government borrowing hit £11.8 billion in August.

The ONS said that borrowing in August was £2.6 billion below levels from the same month last year, but represented a £6.5 billion surge from pre-pandemic levels in 2019, when it stood at £5.3 billion.

Government spending remained largely unchanged at £73.2 billion last month compared with a year earlier, despite a 22.1 per cent jump in interest payments on public debt to £8.2 billion amid rocketing inflation.

m/f

Related Articles

Back to top button