In a surprising turn of events, government borrowing for last month came in lower than anticipated, even as debt interest payments surged to an all-time high for July.
Official figures reveal that the difference between government spending and tax income, also known as borrowing, amounted to £4.3 billion. While this was £3.4 billion more than the same period last year, it marks the fifth-highest July figure since records began being tracked on a monthly basis in 1993.
Despite being below forecasts of approximately £5 billion, the boost in self-assessment income tax revenues contributed to the lower borrowing figure.
However, it’s worth noting that the government faced a substantial debt interest payment of £7.7 billion, according to the Office for National Statistics (ONS). This amount is reported to be the highest total for July ever recorded.
A portion of the interest paid by the government on its debt is linked to the Retail Prices Index inflation measure. This index has experienced significant inflation throughout the year, although recent months have seen a decline in the rate.
The Office for National Statistics reported that government borrowing for the current financial year up to this point has reached £56.6 billion. Although this figure surpasses the amount for the same four-month period last year, it falls short of the forecast made by the government’s independent forecaster, the Office for Budget Responsibility (OBR), in March.
As of the end of July, the total net debt stood at £2.6 trillion, equivalent to about 98.5% of the UK’s gross domestic product (GDP), which represents the total value of goods and services produced in the country over a year.
Amid discussions and speculation, there are indications that the government might consider announcing tax cuts in the upcoming Autumn Statement, preceding the anticipated general election in 2024.
