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Government borrowing falls but at slower rates, new data shows

·2-min read
Government borrowing fell, but at slower rates than previously (Stefan Rousseau/PA) (PA Wire)
Government borrowing fell, but at slower rates than previously (Stefan Rousseau/PA) (PA Wire)

Government borrowing continued to fall as the Treasury saw an increase in tax receipts and a fall in expenses, although the speed of the falls slowed by comparison to previous months, according to official figures.

The Office for National Statistics (ONS) said public sector net borrowing was £18.8 billion in October, down £200 million on the same month last year.

However, this remains the second-highest October for borrowing since records began in 1993. The highest was a year ago.

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

Samuel Tombs, Pantheon Macroeconomics

The data shows that borrowing so far this financial year has been £127.3 billion – £103.4 billion less than the same period a year ago, as numerous Covid-19 support packages start winding down.

Public sector net debt now stands at £2.28 trillion at the end of October – or around 95.1% of gross domestic product (GDP) – maintaining levels not seen since the early 1960s.

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

But interest payments on debt remain high, with £5.6 billion paid out in October versus £1.8 billion a year earlier.

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.”

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

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