Borrowing hits £24.5 billion in September as public debt passes £3 trillion for the first time
Debt interest of £10.9 billion was the largest September figure on record, and borrowing across the first half of the year ran £6 billion ahead of the official forecast, one week before the Budget.
The Government borrowed £24.5 billion in September, £1.8 billion more than in the same month a year earlier, according to public sector finance figures published by the Office for National Statistics on 21 October. Only September 2020, in the depths of the pandemic, has recorded a larger monthly shortfall. The same release put public sector net debt at a provisional £3,005.0 billion at the end of the month, which means the stock of debt has gone past £3 trillion for the first time, although the statisticians stress that the estimate may be revised.
The cost of servicing that debt did much of the damage. Central government debt interest payable came to £10.9 billion in September, a rise of £1.6 billion, or 16.6 per cent, on a year earlier and £2.0 billion more than the Office for Budget Responsibility had forecast. No previous September since monthly records began in 1997 has carried a higher interest bill, and September was only the eighth month in which interest payable has topped £10 billion. Of the £10.9 billion, £4.0 billion reflected the capital uplift on index-linked gilts, which followed a 0.6 per cent rise in the Retail Prices Index between June and July.
Across the first half of the financial year, borrowing totalled £97.8 billion. That is £4.4 billion, or 4.3 per cent, lower than the equivalent period last year, yet £6.0 billion above what the OBR forecast in March. Measured against the size of the economy, borrowing in the April to September period was 3.1 per cent of gross domestic product, 0.3 percentage points down on a year earlier, and the tenth highest for that stretch since monthly records began in 1993.
The cash total is a record. The share of the economy is not, and the Budget turns on the distance between the two.British Journal analysis
Receipts grew, but spending grew faster. Central government took in £90.1 billion of current receipts in September, up 5.2 per cent on a year earlier, helped by income-related taxes rising 7.4 per cent to £23.2 billion and corporation tax receipts rising 9.0 per cent to £8.9 billion. Current expenditure, though, reached £98.6 billion, up 7.0 per cent, with spending on goods and services at £39.6 billion and net social benefits at £30.6 billion. The September benefits figure also carries an estimated £1.9 billion accrued for Winter Fuel Payments, which the statisticians book in September because eligibility is settled then, even though the money reaches recipients from November.
Set against the economy, the debt picture is less dramatic than the cash milestone suggests. Net debt of £3,005.0 billion was £91.7 billion higher than a year earlier but equal to 94.0 per cent of GDP, 0.7 percentage points lower than a year earlier, at a level last seen in the early 1960s. The wider balance sheet measure, public sector net financial liabilities, stood at £2,643.4 billion, or 82.7 per cent of GDP, 0.7 percentage points higher than a year earlier. The debt stock first passed £1 trillion in February 2010, after the financial crisis, and £2 trillion in June 2020, during the coronavirus pandemic.
The figures land a week before a Budget at which the numbers will be tested again. The current budget deficit, which covers day-to-day activities, was £15.8 billion in September and £64.0 billion across the first half of the year, £5.7 billion less than last year but £2.4 billion above forecast. One of the Government's fiscal objectives is a surplus on that measure by the financial year ending March 2030. The Budget falls on Wednesday 28 October, with updated OBR forecasts published the same day, and the next set of public sector finance figures is due on 20 November.
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