UK borrowing jumped in October as support for energy bills came into effect – business live | Company

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Energy price support has put UK borrowing back on an upward trend, says Paul Dales of Capital Economics:

October public finance figures showed that government borrowing is no longer below last year’s monthly totals.

And the combination of government energy price support and pressures from a weakening economy means borrowing will reach £175bn (6.9% of GDP) in 2022/23, or a whopping £42bn above the 2021/22 total.

But there is also good news in the October public finance release:

The full-year estimate for the 2021/22 financial year has been revised down a fraction, from £133.3bn to £132.7bn. And borrowings for the previous six months of the 2022/23 financial year have been revised down by £1.6bn.

Here is a breakdown of UK public finances, from the ONS Public Sector Finance Statistician Fraser Munro:

This month the public sector spent £91.2billion, an increase of £8.8billion from October 2021 and its revenue rose by £4.5billion to 77 £.6 billion. pic.twitter.com/NPiBZPUTWs

—Fraser Munro (@Fraser_ONS_PSF) November 22, 2022

Central government, the largest part of the public sector, spent £84.5billion in October 2022, an increase of £8.8billion on the previous year, while its revenue fell from £1.0 billion to £70.2 billion. pic.twitter.com/ZriKAQZ4V9

—Fraser Munro (@Fraser_ONS_PSF) November 22, 2022

Current or day-to-day central government spending was £76.8bn, up £6.5bn from October 2021 and includes the first payments under government energy support schemes to households and national energy suppliers.

—Fraser Munro (@Fraser_ONS_PSF) November 22, 2022

Intro: Energy support pushes up UK borrowing

Hello and welcome to our ongoing coverage of business, financial markets and the global economy.

UK government borrowing surged last month, buoyed by support for household energy bills and soaring inflation that pushed up interest payments.

UK public sector net borrowing was £13.5bn in October, more than £4bn more than the £9.2bn borrowed in October 2021 to balance the pounds .

It is the fourth highest October borrowing since monthly records began in 1993.

Public sector net borrowing, excluding public sector banks, was £13.5 billion in October 2022.

This was £4.4bn more than in October 2021 and the fourth highest October borrowing since monthly records began in 1993.

➡️ pic.twitter.com/aAP3fwT1xk

— Office for National Statistics (ONS) (@ONS) November 22, 2022

Public spending was boosted by £1.9billion by the cost of helping households with their energy bills. This £400 payment is paid in six monthly installments, starting in October.

former prime minister by Liz Truss commit to capping household bills at an average of £2,500 a year also added to government spending.

Michal Stelmachsenior economist at KPMG United Kingdomsaid:

“Public finances continue to face a tug of war between the demand for energy support and the overriding need to balance the books.

As things stand, the leeway to meet the new fiscal targets hangs by a thread, and we anticipate that they could easily be missed thanks to a less favorable economic outlook compared to the forecasts of the OBR.

Public sector net debt, excluding public sector banks, was £2,459.9 billion at the end of October 2022, or around 97.5% of GDP.

An increase of £148.3 billion but a decrease of 0.5 percentage point of GDP compared to October 2021. pic.twitter.com/MgdPGEj3XS

— Office for National Statistics (ONS) (@ONS) November 22, 2022

Chancellor Jeremy Hunt, who outlined a £55billion package of spending cuts and tax increases last week, warned that “there is no easy path to balancing the nation’s books” (more information from the Chancellor shortly).

Hunt also announced more support for energy bills last week beyond April, which will push borrowing even higher.

The October borrowing figure was actually lower than city economists expected.

But the UK has spent £6.1billion on interest payments on the national debt. More than half of that bill (£3.3bn) was due to the surge in the retail price index, which fixes interest payments on pegged gilts.

Last week, the Office for Budget Responsibility predicted that the national debt would peak at nearly 100% of national output in three years, driven by higher interest on the debt, inflation-linked social spending and a weaker economy.

Underlying public sector net debt (excluding the Bank of England) peaks in 63 years at 98% of GDP in 2025-26, then declines slightly to 97% of GDP in 2027-28. Medium-term debt is 18% of GDP – more than £400bn – higher than March forecasts.#AutumnDeclaration pic.twitter.com/9BlZ4ugvWL

— Office of Budget Responsibility (@OBR_UK) November 17, 2022

Also coming today

Labor leader Sir Keir Starmer must tell business leaders Britain’s ‘immigration dependency’ must end.

Bosses have pushed Westminster to use immigration to solve labor shortages and boost economic growth. But the Labor leader will tell the CBI conference this morning that UK businesses need to wean themselves off ‘cheap labour’ and that a low-wage growth model is no longer working for the British people.

My colleague jessica Elgot reports:

The Labor leader is expected to tell the Confederation of British Industry conference that his party will be ‘pragmatic’ about the shortage of workers and will not ignore the need for skilled migrants – but stressed that any change ‘will come with new conditions for business”.

Starmer will say Labor expects to keep a points-based immigration system and train more workers, especially in high-skilled jobs and the NHS. But he refrained from promising that overall migration would decline – a promise Rishi Sunak renewed last week.

energy regulator Degem warns that suppliers have let vulnerable customers down as people face a cold and costly winter, with 5 particularly low.

For example, some providers set debt repayments so high that customers feel they could not recharge their prepaid meters.

The OECD publishes its half-yearly analysis of major global economic trends and outlook for the next two years. This will show how advanced economies, including the UK, should fare….

And the Treasury committee will question senior Office for National Statistics officials on last week’s autumn statement

Agenda

  • 7am GMT: UK public finances for October

  • 10 a.m. GMT: OECD publishes its economic outlook

  • 2:15 p.m. GMT: Hearing of the Treasury Committee on the autumn declaration, with the OBR

  • 3pm GMT: Eurozone consumer confidence estimate for November

Updated at 2:50 a.m. EST

theguardian

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