UK borrows more than expected as PM contenders promise more help

The public sector borrowing underscores the challenges facing the country's next prime minister to provide more support to consumers hit by sky-rocketing energy costs

ReutersWilliam Schomberg
Published : 19 August 2022, 07:40 AM
Updated : 19 August 2022, 07:40 AM

Britain borrowed more than expected in July, official data showed, underscoring the challenges facing the country's next prime minister to provide more support to consumers hit by sky-rocketing energy costs.

The Office for National Statistics said on Friday that public sector borrowing excluding state-owned banks stood at 4.944 billion pounds ($5.89 billion).

By comparison, in July 2019, before the COVID-19 pandemic which prompted an historic surge in government borrowing, the public finances were in surplus by 0.9 billion pounds.

A Reuters poll of economists had pointed to borrowing of 2.8 billion pounds for July, which is typically a month when income tax payments flow into the public coffers.

Over the first four months of the 2022/23 financial year starting in April, Britain borrowed 55.0 billion pounds, 12.1 billion pounds less than over the same period last year but 32.6 billion pounds more than between April and July 2019.

It was also about 3 billion pounds more than expected by the Office for Budget Responsibility watchdog in March, and July's shortfall was nearly 5 billion pounds bigger than the OBR forecast.

Both candidates to replace Prime Minister Boris Johnson are promising more financial help for households.

Foreign Secretary Liz Truss has said she will cut taxes, something the other contender, former finance minister Rishi Sunak, says risks fuelling inflation. He prefers more direct and more targeted support. As well as hitting households, the rise in inflation is adding to the government's debt interest bills.

Britain paid debt interest of 5.8 billion pounds in July, up 63% from July last year.

The ONS data showed overall central government spending in July rose by 4.6% compared with the same month last year while receipts rose 8.4%.

Over the April-July period, spending was 1.5% higher while receipts were up by 12.7%.

Toufique Imrose Khalidi
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