Rising cost of debt interest keeps UK borrowing at record levels

(Alliance News) - UK public borrowing continued at record levels in December, according to the Office for National Statistics.

UK public sector borrowing - excluding public sector banks - in the final month of 2022 reached its highest December figure since monthly records began in 1993, according to the ONS.

Borrowing hit GBP27.4 million, which was GBP16.7 billion higher than the previous year, and GBP9.8 billion higher than the latest official forecast from the Office for Budget Responsibility.

The increase was largely due to a sharp rise in the spend for energy support schemes, as well as an increase in debt interest.

In the third payment of the Energy Bill Support Scheme, the central government paid out GBP1.9 billion to households, to provide support with the cost of energy bills. There will be a further three monthly payments until the end of the scheme in March.

The interest payable on central government debt also reached a record for December, hitting GBP17.3 billion. This was the second largest of any single month, trailing only the GBP20.0 billion recorded back in June 2022.

"Since mid-2021, the cost of servicing central government debt has increased considerably...The recent high levels of debt interest payable are largely a result of higher inflation, with the interest payable on index-linked gilts rising in line with the retail prices index," ONS said.

Of the total sum, GBP13.7 billion reflects the impact of inflation on index-linked gilt stock, the body said.

By Elizabeth Winter, Alliance News senior markets reporter

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