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Public sector finances - Dec 22

ended 24. January 2023

The Govt has just published the latest Public Sector Finances data for December. You can read the full report here (get a whole cafetière of coffee) but main points below. What are your thoughts?

  • Public sector borrowing (PSNB ex) in December 2022 was £27.4 billion, the highest December figure since monthly records began in January 1993, largely because of a sharp rise in spending on energy support schemes and an increase in debt interest.
  • December’s borrowing was £16.7 billion higher than that of December 2021 and £9.8 billion higher than the latest official forecast published by the Office for Budget Responsibility (OBR); largely because of student loans assumptions made by the OBR (see Section 3).
  • Public sector debt (PSND ex) at the end of December 2022 was £2,503.6 billion or around 99.5% of gross domestic product (GDP), with the debt to GDP ratio at levels last seen in the early 1960s.
  • Central government debt interest payable was £17.3 billion in December 2022, the highest December figure since monthly records began; the increase in interest payable is largely because of the effect of Retail Prices Index (RPI) changes on index-linked gilts.
  • In the financial year-to-December 2022, the public sector borrowed £128.1 billion, £5.1 billion more than that borrowed in the same period last year, but £2.7 billion less than forecast by the OBR.

2 responses from the Newspage community

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Editor
Riz Malik
Independent Financial Adviser at R3 Wealth
These figures are not surprising and considering income will decline if the UK economic situation worsens, this deficit will only grow. Once again we are looking to the next budget on the 15th of March for salvation. On the back of these figures, Kier may be taking a trip to Ikea to get some interior design ideas for No 10.
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Mark Grant
Business Finance Adviser at The Business Finance Branch
The December 2022 debt interest cost was £17.3 billion of £27.4 total public sector borrowing requirement, or 63% and the majority of the borrowing.
The Bank of England holds over £800 billion in UK government bonds bought via Quantitative Easing (QE) - used to print money into the economy that is Treasury (taxpayer) backed.
That is more than a third of the UK's total outstanding government bond debt - and therefore the Bank of England receives a similar proportion of interest payments from the government.
Can interest payments on government bonds held by the Bank of England be better deployed to directly support individuals, families and businesses in the cost of living crisis rather than additional spending (and borrowing)?