Rocketing inflation has caused interest payments on UK government debt to surge to the highest level on record in June.
Interest payments reached £19.4bn, which was more than double the previous monthly record set in June last year.
The unprecedented debt interest payments have been pushed increasingly higher by inflation in recent months.
Government borrowing – the difference between spending and income from tax – grew to £22.9bn, up by £4.1bn from June 2021, according to the Office for National Statistics.
June borrowing reached its second-highest level since records began 29 years ago.
Interest rates, which analysts expect to be hiked by 0.5 percentage points in August to 1.75%, are expected to cost the taxpayer more as prices are forecasted to grow further.
Liz Truss, one of two candidates for Boris Johnson’s successor, has vowed to cut taxes immediately, whereas Rishi Sunak insisted this would further fuel inflation and, in turn, push interest payments even higher.
The chance to act when rates were low was missed by the former chancellor, who is favourite to become the next Prime Minister.
The National Institute of Economic and Social Research’s Jagjit Chadha told the Financial Times that Sunak's actions left the country with "an enormous bill and heavy continuing exposure to interest rate risk."
Although it was the Bank of England’s (BoE) decision to implement quantitative easing, Chadha said that when rates were just 0.1% in 2021, the government could and should have insured the cost of servicing this debt against the risk of higher interest rates.
The Bank of England is independent of the government.
"Such a lost opportunity is an unnecessary cost to the public finances at a very difficult time," the think tank commented.
Although Sunak was highly unlikely to overrule the Bank of England’s decision to not fix interest rates on debt payments, he may soon have to face the wrath and criticism from his MPs regarding the loss of an extra soon-to-be hundred of billions of pounds.