Government borrowing undershoots forecasts after inflation-led tax boost

The Office for National Statistics said public sector net borrowing stood at £14.3 billion last month, £1.6 billion less than a year earlier.

Henry Saker-Clark
Friday 20 October 2023 04:03 EDT
Chancellor of the Exchequer Jeremy Hunt (Jordan Pettitt/PA)
Chancellor of the Exchequer Jeremy Hunt (Jordan Pettitt/PA) (PA Wire)

Your support helps us to tell the story

From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.

At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.

The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.

Your support makes all the difference.

Government borrowing was lower than expected last month in a potential boost to the Chancellor ahead of the autumn statement.

The Office for National Statistics (ONS) said public sector net borrowing stood at £14.3 billion last month, £1.6 billion less than a year earlier, as tax revenues were buoyed by inflation.

It still represented the sixth-highest September figure on record.

However, it was noticeably below the £18.3 billion figure predicted by a consensus of economists and further below the £20.5 billion forecast by the Office for Budget Responsibility (OBR) earlier this year.

The ONS also said net debt stood at £2.599 trillion at the end of September, equalling around 97.8% of UK GDP. This is 2.1 percentage points higher than the same time last year.

Chancellor of the Exchequer Jeremy Hunt said: “We had to borrow during the pandemic to protect lives and livelihoods, but since then Putin’s invasion has pushed up inflation and interest rates.

“This means we spent twice as much on debt interest last year as we did the previous year.

“This is clearly not sustainable; we need to get debt falling and reduce public sector waste so that those delivering public services can get back to what they do best; teaching our children, keeping us safe and treating us when we’re sick.”

It comes less than a month before the Chancellor delivers his autumn statement but he has already indicated there are unlikely to be significant tax cuts as part of the package.

However, some economists have suggested he might be more likely to deliver tax cuts or giveaways next year due to the figures.

Ashley Webb, UK economist at Capital Economics, said: “We continue to think that the Chancellor will have some wiggle room for a few pre-election giveaways in the March budget.

“But with the full upward impact on borrowing from higher interest rates and weaker GDP growth still coming down the line, any package of pre-election net tax cuts or spending rises will probably need to be modest.”

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in