There was some much-needed respite for Chancellor Rishi Sunak as the government’s borrowing fell in April compared with the previous year, but the good news was short-lived.
Interest payments on borrowing are expected to surge in coming quarters on soaring levels of the Retail Price Index, which is the measure of inflation used on government inflation-linked debt payments.
Sunak said: “While we are doing what we can to help families deal with rising prices, inflation is also pushing up our spending on debt interest — which is expected to reach £83bn this year.
“We must take a balanced and responsible approach to support people now, while also not burdening future generations, and we’re on track to drive public debt down by 2024-25.”
The Chancellor has come under intense pressure to alleviate the rocketing cost of living, a result of 40-year inflation highs as fuel, energy and food prices have rocketed, a squeeze that has been further exacerbated by the war in Ukraine and China’s most recent Covid lockdown.
Even though lower than a year ago, April borrowings were the fourth-highest since monthly records began and £7.9bn greater than 2019's equivalent figure, the Office for National Statistics (ONS) said.
Interest payments on government borrowing fell by £0.5bn to £4.4bn last month compared with April 2021, while actual borrowing declined by more than expected.
The difference between spending and tax income (borrowing) was £18.6bn, down £5.6bn from the previous year.
This was largely attributed to greater receipts due to the economy expanding and the government’s outgoings shrinking as schemes such as furlough were stopped or curbed.
Receipts of £70.2bn included tax of £50.2bn, which represented a hike of £5.5bn, according to the ONS.