UK public sector borrowing increased last month as government measures were implemented to protect households and businesses from rising energy prices.
Data released by the Office for National Statistics on Tuesday showed public sector net borrowing was £13.5bn in October, £4.4bn more than the same month last year and the fourth highest since monthly records began in 1993. It was the loan amount for October.
Last month, government measures such as the Energy Price Assistance Scheme, Energy Price Guarantee and Energy Fee Relief Scheme came into effect to help businesses and consumers suffering from high energy prices.
Michal Stelmach, senior economist at KPMG UK, said the rise was “largely due to the energy price cap for households that came into effect in October”.
ONS figures show that government plans increased public spending by £1.5bn in October. These helped push central government spending to £76.8bn in October.
Ruth Gregory, senior UK economist at Capital Economics, said: “October fiscal figures show government borrowing is no lower than last year’s monthly total.
Borrowing for October was well below the £22bn forecast of economists surveyed by Reuters, but the ONS said the lack of data so far meant that the borrowing estimate for October was at £22bn. , has not yet included the cost of energy tariff relief schemes for businesses.
EY ITEM Club Chief Economic Advisor Martin Beck says the easing of the energy bill has yet to be taken into account, so “the October borrowing amount is likely to be amended higher in a future release.” .
He said it could be a while before the true borrowing situation becomes clear, as the ONS describes the household planning cost calculation as an “initial indicative estimate.”
Social assistance payments were also £1bn higher than a year ago, reflecting the partial payment of grants to help families with their living expenses announced in May.
Central government tax revenue was £51.7bn, £2.5bn more than last October. A strong labor market was another positive area, with his £1.2bn extra income from payroll taxes.
For the financial year to October 2022, borrowings over the last six months have been reduced by £1.6bn to £84.4bn. This is £21.7bn less than in the same period last year.
But as the cost of energy support rises, the economic outlook weakens and tax revenues fall, “year-on-year trends in borrowing will deteriorate in the coming months,” said Samuel Toombs, UK chief economist at Pantheon Macroeconomics. said Mr.
With rising costs, “the deficit is clearly worsening now and will only encourage the prime minister to keep a firm grip on finances,” Gregory said.
Public sector net borrowing, or borrowing accumulated over time, was 85.2% of GDP in October. Last week, the UK’s fiscal watchdog, the Office for Budget Responsibility, predicted that the UK’s public debt would surge to 97.6% of GDP from 2025 to 2026, his highest level in 63 years. did. Two years to soften the blow of rising energy prices.
UK Prime Minister Jeremy Hunt said:
Despite government support, OBR expects the recession to last for more than a year, wiping out the last eight years of living standards growth.
https://www.ft.com/content/da60d21b-7fe0-4b1f-85c7-bbf3f4a0b2f6 UK Public Borrowing Increases as Energy Cap Takes Effect