Most economists had anticipated borrowing of £4.9 billion in July, whereas the UK’s official forecaster, the Office for Budget Responsibility (OBR), had predicted £6 billion.
The ONS added that web debt stood at £2.58 trillion on the finish of July, equal to round 98.5% of the UK’s gross home product (GDP) and 1.9% increased than a yr earlier.
It had mentioned final month that the Government’s debt pile had exceeded the UK’s financial output for the primary time since 1961, however the newest information confirmed that stronger-than-expected gross home product (GDP) in current months noticed June’s web debt determine revised all the way down to 99.5%.
Official figures earlier this month estimated that the financial system grew by a better-than-forecast 0.2% between April and June.
The ONS mentioned that borrowing within the first 4 months of the monetary yr up to now stood at £56.6 billion, which was £13.7 billion greater than the identical interval final yr, however £11.3 billion lower than the £68 billion forecast by the OBR.
As inflation slows, it’s very important that we don’t alter our course and proceed to behave responsibly with the general public funds
Chancellor Jeremy Hunt mentioned: “As inflation slows, it’s vital that we don’t alter our course and continue to act responsibly with the public finances.
“Only by sticking to our plan will we halve inflation, grow the economy and reduce debt.”
Borrowing will probably be in sharp focus forward of subsequent yr’s anticipated common election, with Mr Hunt and Prime Minister Rishi Sunak below stress from throughout the Conservative Party to chop taxes to enhance their possibilities on the polls.
But Gabriella Dickens, at Pantheon Macroeconomics, mentioned the outlook for debt curiosity funds continues to be painful and may even see the Government provided little “wiggle room”.
The curiosity the Government paid on its debt hit £7.7 billion in July – £1.5 billion greater than a yr earlier and the very best seen for any July since information started in 1997.
Britain’s debt curiosity invoice has been rocketing over the previous yr, reflecting the impression of sky-high retail costs index (RPI) inflation on index-linked gilt inventory.
Inflation is easing again from highs seen in October final yr, which is predicted to result in reductions within the Government’s debt curiosity funds from subsequent month.
But Ms Dickens mentioned: “Our calculations suggest that the OBR likely would revise up its forecast for debt interest payments by around £40 billion in 2024/25 and by around £20 billion in five years’ time if it were to produce the equivalent forecasts using today’s market expectations for Bank Rate and the current level of gilt yields.”
And whereas borrowing is about to return in under the OBR’s forecast for the 2023-24 monetary yr, she mentioned: “We still doubt, however, that the Chancellor will have enough wiggle room to meaningfully cut taxes or increase expenditure in the run up to the next general election, which must be held by January 2025.”
