The UK’s budget deficit expanded more than previously predicted in September, reaching the highest figure for that month since 2021, according to a report by the Office for National Statistics released on Tuesday.
Public sector net borrowing rose to GBP 16.6 billion in September, up from GBP 14.5 billion during the same month last year. This marks the third highest borrowing recorded for September since monthly tracking began in January 1993.
Data indicated that government borrowing surpassed the GBP 15.1 billion expected by the Office for Budget Responsibility. However, it remained below economists’ predictions of GBP 17.4 billion.
The cost of interest on central government debt climbed by GBP 4.6 billion from a year ago, totaling GBP 5.6 billion in September. This rise is due to the notably low payment in September 2023 resulting from fluctuations in the retail price index, rather than particularly high interest rates for September 2024.
For the financial year ending September, borrowing increased by GBP 1.2 billion to GBP 79.6 billion, marking the third highest year-to-September borrowing since January 1993. The OBR had projected a deficit of GBP 73.0 billion for this timeframe.
“Although tax revenue saw an increase, it was overshadowed by rising expenditures, largely driven by higher debt interest and salary increases within the public sector,” commented Jessica Barnaby, ONS deputy director for public sector finances.
Chancellor Rachel Reeves is scheduled to present the Autumn Budget 2024 on October 30, with expectations of raising taxes and cutting spending by GBP 40 billion.
Chief Secretary to the Treasury Darren Jones stated that the budget would entail tough choices to strengthen the underpinnings of the economy and initiate the promised changes.
According to ONS data, public sector net debt, excluding banks, was estimated at 98.5 percent of gross domestic product at the close of September.
The central government’s net cash requirement stood at GBP 13.2 billion in September, which is GBP 1.9 billion lower than the figure for September 2023.
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