Government borrowing figures put Sunak’s debt pledge in doubt


Prime Minister Rishi Sunak is facing another by-election test after MP Peter Bone was recalled by voters (Andy Buchanan/PA) (PA Wire)

The severe strains facing the UK’s public finances were thrown into sharp relief today when official figures showed the Government was forced to borrow a bigger than expected £14.3 billion in November.

The Office for National Statistics (ONS) said it was the fourth highest borrowing on record for the month, though slightly down on last November.

The worse than forecast figures will make it hard for Rishi Sunak to claim that he had fulfilled his start of the year pledge to reduce national debt by the year-end, although Downing Street has argued the Prime Minister was referring to the longer term path of debt over the next five years. It means that borrowing for the financial year to date has already reached £116.4 billion, ahead of last year’s eight month total by £24.4 billion.

The ONS also revised upwards previous borrowing figures so that the cumulative deficit for 2023/24 is now £3.8billion higher.

Public sector net debt excluding public sector banks was £2.67 trillion at the end of November, equivalent to 97.5% of the UK’s annual GDP.

That is 1.8 percentage points higher than in November 2022 and remains at levels last seen in the early Sixties.

Chief Secretary to the Treasury, Laura Trott said: “It was right to spend billions protecting people during the pandemic and the energy shock triggered by Putin’s invasion of Ukraine, but we cannot leave our children and grandchildren to pick up the tab.

“That’s why the Prime Minister has made reducing debt a top priority. We are taking difficult decisions in the national interest to control our borrowing needs and improve productivity, so that we deliver the public services people need while keeping inflation down.”

The November deficit was worsened by the level of interest on government debt, which has been pushed up by the large number of gilts with index linked interest payments. Last month the Government had to pay £7.7 billion of interest, the highest total for a November.

Danni Hewson, head of financial analysis at brokers AJ Bell, said: “Inflation has been a double-edged sword for public sector finances. On the one hand frozen thresholds combined with inflation busting pay increases and increased VAT as the cost of goods has shot up have helped increase the tax take by almost £3 billion compared to the same period last year.

“But on the flip side, uprated benefit costs to pay those wage increases and another hefty interest bill on all that debt have gobbled up the additional income and left the government still needing to balance the books by borrowing.”

Philip Shaw, chief UK economist at Investec, said: “Overall we expect that borrowing over 2023/24 as whole will fall below last year’s total of £130.5 billion and could well come close to the OBR’s forecast at last month’s Autumn Statement of £123.9 billion.”