Government borrowing falls as tax income rises

Government borrowing falls as tax income rises
Medical staffImage source,

Surging inflation led interest payments on government debt to hit the highest amount for May on record.

Interest payments paid by the government for last month hit £7.6bn, up £3.1bn from a year earlier.

Government borrowing fell in May from a year earlier but still remained higher than pre-Covid levels.

Borrowing - the difference between spending and tax income - was £14bn, down £4bn from a year earlier, the Office for National Statistics said.

But the figure was still the third-highest May borrowing since monthly records began in 1993 and was also £3.7bn more than the Office for Budget Responsibility (OBR) had forecast.

The recent high levels of debt interest payments are largely a result of higher inflation, the ONS said.

So far this financial year, payments have totalled £14.1bn, up £4.7bn year on year.

The ONS said May's figure was the third highest debt interest payment made by a government in any single month.

The OBR estimates that debt interest payments will cost the government £87.2bn over the financial year ending in March 2023.

Chancellor Rishi Sunak said rising inflation and increasing debt interest costs "pose a challenge for the public finances, as they do for family budgets".

Meanwhile, central government receipts were £66.6bn in May 2022, £5.7bn more than May 2021, with an annual increase of £3.4bn in taxes.

Tax revenues in total rose to £48.3bn in May, with National Insurance Contributions (NICs) raising £2bn more than last year.

Employees, employers and the self-employed started paying 1.25p more in the pound for National Insurance from 6 April.

Leave a Comment

Required fields are marked with *

Cancel reply

Top Stories