Government payments to soften the impact of rocketing energy bills helped send UK public borrowing soaring to more than £27bn last month – the highest figure for December since modern records began 30 years ago.
The latest bulletin on the health of the UK’s finances from the Office for National Statistics showed government spending last month exceeded receipts by £27.4bn, £16.7bn higher than borrowing in December 2021.
Tax receipts in December were up slightly on December 2021 at more than £74bn, but energy support added just over £9bn to public spending, according to the official data.
Higher interest payments of £17.3bn on the UK’s £2tn-plus national debt also contributed to a higher than expected borrowing total, the ONS added. Debt interest payments were double the figure for the same month a year earlier.
The December shortfall meant that in the first nine months of the 2022-23 financial year, public borrowing stood at £128.1bn – £5bn higher than in the same period of 2021-22, but £2.7bn less than forecast by the government’s independent watchdog, the Office for Budget Responsibility.
In November, at the time of the Treasury’s autumn statement, the OBR said it anticipated government borrowing of £177bn for the full 2022-23 financial year – almost £49bn up on the previous year.
The chancellor of the exchequer, Jeremy Hunt, said: “Right now we are helping millions of families with the cost of living, but we must also ensure that our level of debt is fair for future generations.
“We have already taken some tough decisions to get debt falling, and it is vital that we stick to this plan so we can halve inflation this year and get growth going again – creating better paid jobs across the country.”
The ONS said that since the middle of 2021, rising inflation had led to increased payouts on bonds linked to the retail prices index. That had resulted in December debt interest payments being the second highest monthly figure on record, beaten only by the £20bn figure for June 2022.
Ruth Gregory, a UK analyst at Capital Economics, said it was the third month in a row borrowing had been higher than the same month a year earlier. “December’s public finances figures provided more evidence that the government’s fiscal position is deteriorating fast,” Gregory said.
“Overall, today’s worse-than-expected public finances figures will only embolden the chancellor in the budget on 15 March to keep a tight grip on the public finances and mean that he waits until closer to the next general election, perhaps in 2024, before announcing any significant tax cuts.”