Financial News: UK Borrowing Overshoots Estimate

UK Borrowing Overshoots Estimate

(RTTNews) - The UK government borrowing exceeded the official estimate in August as spending rose more than income, partly due to the impacts of inflation, data from the Office for National Statistics revealed Tuesday.

Public sector net borrowing increased GBP 2.9 billion from the previous year to GBP 18.3 billion in August.

This was the second-highest borrowing for August on record and also GBP 3.5 billion above the estimate of the Office for Budget Responsibility.

In the financial year to August, borrowing decreased GBP 2.2 billion to GBP 77.3 billion. However, this was GBP 8.1 billion above the OBR forecast. Borrowing reached 2.5 percent of gross domestic product in the financial year to August but this was 0.2 percentage points lower than in the same period last year.

At the end of August, public sector net debt was equivalent to 93.8 percent of GDP, was 1.3 percentage points lower than a year earlier.

Data showed that the self-assessed income tax receipts rose GBP 0.2 billion to GBP 1.5 billion. Despite higher tax receipts, central government borrowing was GBP 13.3 billion, around GBP 1.6 billion more than a year earlier.

Central government debt interest payable was GBP 8.8 billion in August, which was the highest August figure since monthly records began in 1997.

Of this total, GBP 2.1 billion reflected the capital uplift on index-linked gilts, largely because of the 0.3 percent increase in the retail price index, the ONS said.

Data poses challenges to Chancellor John Healey in fulfilling the fiscal rules. Healey is set to deliver the budget on October 28. The OBR will publish an updated set of fiscal forecasts to accompany the Budget.

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