Inflation drives UK December borrowing to record £27.4bn

UK BORROWING in December hit its highest total in 30 years driven upwards by the government’s debt interest bill soaring due to raging inflation, official figures out yesterday show.

The government took on £27.4bn of debt last month, the largest amount since records began in 1993, according to the Office for National Statistics (ONS).

The amount was higher than market expectations.

The big overshot was caused by the amount of money Britain pays investors climbing rapidly last month to £17.3bn.

A huge chunk of the government’s debt stock is linked to an old measure of inflation, the retail price index, meaning investor payouts rise in line with prices.

Interest payments are upgraded in line with the RPI figures from two before, which topped 14 per cent in October, forcing the debt bill to nearly double December 2021’s number.

The government’s energy price cap of £2,500 has seen it spend billions of pounds on protecting households from crippling rises in energy bills.

That has raised spending sharply, widening the gap between what the treasury takes in tax receipts and spends on supporting the UK economy.

Poorer households have also received one-off payments to help with eye watering living costs, stepping up spending further.

Yesterday’s borrowing figures are the penultimate ones before the budget on 15 March.

Chancellor Jeremy Hunt and Prime Minister Rishi Sunak are not expected to cut taxes for fear of raising the deficit too much.

The borrowing figures topped projections by the Office for Budget Responsibility in November, squeezing Hunt’s room to help Brits and businesses grappling with an inflation crunch by cutting taxes and increase spending at next month’s budget.