UK Budget Deficit Exceeds Estimate In August

ukpublicfinance sept21 21sep22 lt

The UK budget deficit exceeded the official estimate in August, despite a notable increase in tax revenue, as high inflation raised the debt servicing costs, data published by the Office for National Statistics revealed Wednesday.

Public sector net borrowing excluding public sector banks declined to GBP 11.8 billion from GBP 14.4 billion last year.

However, this was GBP 5.8 billion more than the GBP 6.0 billion forecast by the Office for Budget Responsibility and also GBP 6.5 billion more than in pre-coronavirus period. The level expected by economists was GBP 8.45 billion.

Data showed that central government debt interest payable grew GBP 1.5 billion to GBP 8.2 billion in August, the highest August figure since monthly records began in April 1997.

The increase in debt interest payable is largely due to the surge in inflation as interest payable on index-linked gilts rise in line with the Retail Prices Index.

At the same time, central government receipts increased by GBP 5.6 billion to GBP 69.6 billion. Of these receipts, tax revenue rose by GBP 3.9 billion to GBP 51.4 billion.

In the financial year to August, PSNB excluding banks was GBP 58.2 billion. This was GBP 21.4 billion less than in the same period last year but GBP 0.2 billion more than the OBR forecast.

At the end of August, public sector net debt excluding public sector banks increased to GBP 2,427.5 billion, or around 96.6 percent of gross domestic product.

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