Interest payments on government debt DOUBLED year-on-year in October

Interest payments on government debt more than DOUBLE year-on-year to £5.8bn as another £18.8billion of borrowing racked up in October

  • Government borrowed £18.8billion in October only slightly down from last year
  • Interest payments on UK debt pile rocketed from £1.8bn last October to £5.8bn
  • Fears over Britain’s exposure with £2.28trillion national debt as inflation spikes 

The government’s interest payments more than doubled as the government racked up another £18.8billion of borrowing last month.

The cost of servicing the debt mountain hit £5.6billion in October, up from just £1.8billion in the same month of 2020.

Although the bill is still relatively low, the spike underlines the UK’s exposure after the pandemic hammered the public finances.

There are concerns about inflation driving up interest rates and government costs further.     

Figures released by the Office for National Statistics showed the speed of the reduction in borrowing after the crisis has fallen sharply.

The number for October was just £200million less than recorded a year ago, when the country was still under restrictions, and the second highest on record for the month. 

Borrowing so far this financial year has been £127.3billion – £103.4billion less than the same period a year ago, as Covid-19 support packages wound down and the economy recovered.

Government borrowing in October was £18.8billion just £200million less than recorded a year ago, when the country was still under restrictions

The cost of servicing the debt mountain hit £5.6billion in October, up from just £1.8billion in the same month of 2020

Public sector net debt was £2.28trillion at the end of last month – or around 95.1 per cent of gross domestic product (GDP) – maintaining levels not seen since the early 1960s.

Central Government receipts stood at £65.5billion, up £3.8billion on October 2020, whilst central Government bodies spent £78.8billion – up £1.5billion from a year ago.

Chancellor Rishi Sunak said: ‘The unprecedented support that the Government provided throughout the pandemic protected millions of jobs and businesses, but also left us with much higher public debt.

‘It is right that we now strengthen our public finances for future generations – so at the Budget last month I set out new fiscal rules which will keep debt on a sustainable path in the years to come.’

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, pointed out: ‘Public borrowing is falling much less quickly than earlier this year, reflecting the slowing of the economic recovery and the pick-up in inflation, which determines interest payments on index-linked gilts.

‘Borrowing was just £0.2billion lower than a year ago in October, compared to a drop of £8.2billion in September and an average decline of £17.2billion in the first half of this fiscal year.’

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