The cost of UK government borrowing unexpectedly jumped to £17.8bn last month, piling pressure on Rachel Reeves to plan budget cuts before a spending review in the summer.
The figure was about a quarter higher than the City had forecast and was up by £10.1bn more than in the same month a year earlier, making it the highest December borrowing for four years.
Economists polled by Reuters had predicted that public sector net borrowing (excluding public sector banks) would be £14.1bn in December, up from £11.25bn in November.
The Office for National Statistics (ONS) said spending on government services, benefits and debt interest payments were up.
The data covers a period when the UK cost of borrowing had been climbing, but before the turmoil in global bond markets earlier this month that sent the yield – effectively the interest rate – on government debt surging.
The yield on UK 30-year bonds rose to its highest level since 1998 last week before easing back after data showed the rate of inflation had fallen to a lower than expected 2.5% in December.
Reacting to the uncertainty, currency traders sent the pound tumbling to a 14-month low of $1.22 in early January before a modest rise of two cents in the last week. In September last year the pound stood at $1.34.
The chief secretary to the Treasury, Darren Jones, said: “Economic stability is vital for our number one mission of delivering growth, that’s why our fiscal rules are non-negotiable and why we will have an iron grip on the public finances.
“Through our Spending Review we will interrogate every line of government spending for the first time in 17 years. We’ll root out waste to ensure every penny of taxpayer’s money is spent productively and helps deliver our Plan for Change.”
More details soon …
Source: theguardian.com
