Public sector borrowing topped £16.7bn in February, a new record for the month, as the government continued to fork out on energy bill support for UK homes and businesses.
The figure was almost 140% higher than February 2021, ONS data showed, when monthly borrowing sat at £7.03bn, and up 788% on 2019’s £1.88bn, prior to the Covid-19 pandemic.
Public sector net borrowing (excluding public sector banks) was £16.7 billion in February 2023.
This was the highest February total since records began, largely because of spending on energy support schemes.
— Office for National Statistics (ONS) (@ONS) March 21, 2023
Households have seen energy bills subsidised to an average of £2,500 on an annual basis by the government since October, which caps the amount paid to 33.2p/kWh for electricity and 10.3p/kWh for gas.
Given this is lower than Ofgem’s price cap of £4,297, which determines how much suppliers can charge households per unit, the government has been paying the difference, though this will fall from April when the regulator lowers the figure to £3,332.
It has also been helping businesses by reducing unit prices to 21.1p/kWh for electricity and 7.5p/kWh for gas.
AJ Bell analyst Danni Hewson dubbed this as the “good news,” adding that by July the government should no longer need to fork out on energy support as Ofgem’s cap is lowered again.
“But,” she added, “the debt to GDP ratio has popped over the 99% mark, hitting levels last seen in the early 1960’s – a number that will focus minds in a Treasury”.
The ONS figures also showed that £6.9bn of interest payable on debt pushed February’s borrowing up, but thanks to easing inflation this was down by £1.3bn on January.
Chancellor Jeremy Hunt confirmed that borrowing was still higher since the government was “spending about £1,500 per household” to aid with energy bills.
“What will bring these costs right down is lower inflation, which is why it remains one of our top priorities to halve it this year,” he added.