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Government borrowing falls in April Government borrowing falls in April
(32 minutes later)
Government borrowing in April fell from a year earlier but still remains higher than pre-Covid levels. Government borrowing in April fell from a year earlier, but was still the fourth-highest figure for the month since records began.
Borrowing - the difference between spending and tax income - was £18.6bn, down £5.6bn from a year earlier. Borrowing - the difference between spending and tax income - was £18.6bn, down £5.6bn from April last year.
However, it was the fourth-highest April borrowing since monthly records began, and was £7.9bn higher than in April 2019, before the pandemic. April saw the first contributions to government revenues of the increase to National Insurance.
Borrowing surged during the pandemic as the government spent billions to support the economy. However, spending during the month also included the £3bn cost of the council tax rebate.
April's borrowing figure was slightly lower than forecast, with the government's independent forecaster - Office for Budget Responsibility - having predicted borrowing of £19.1bn. Under this rebate, many households will receive £150 to help with higher energy bills.
Tax revenues rose by £5.5bn to £50.2bn in April, the Office for National Statistics (ONS) said, with last month seeing the first contributions from the increase to National Insurance. April's borrowing total was slightly lower than forecast, with the government's independent forecaster - Office for Budget Responsibility - having predicted a figure of £19.1bn.
However, government spending during the month also included the £3bn cost of the council tax rebate, under which many households will receive £150 to help with higher energy bills. However, it was £7.9bn higher than in April 2019, before the pandemic. Borrowing surged during the pandemic as the government spent billions to support the economy.
Interest payments on government borrowing were £4.4bn in April, and while that was down from £4.9bn last year these payments are expected to rise over the coming months as they are linked to inflation rates. Recession fears grow as rising prices hit spending
Warning of economic downturn as interest rates rise
Tax revenues rose by £5.5bn to £50.2bn in April, the Office for National Statistics (ONS) said, as the increase to National Insurance rates began.
Interest payments on government borrowing were £4.4bn, which was lower than expected. However, analysts expect this figure to surge in the months ahead as they are linked to inflation rates.
"Following the latest spike in RPI inflation, we now expect monthly interest spending to reach an eye-watering £16bn in June," said Michal Stelmach, senior economist at KPMG UK.
Chancellor Rishi Sunak, said: "While we are doing what we can to help families deal with rising prices, inflation is also pushing up our spending on debt interest - which is expected to reach £83bn this year.Chancellor Rishi Sunak, said: "While we are doing what we can to help families deal with rising prices, inflation is also pushing up our spending on debt interest - which is expected to reach £83bn this year.
"We must take a balanced and responsible approach to support people now, while also not burdening future generations, and we're on track to drive public debt down by 2024-25.""We must take a balanced and responsible approach to support people now, while also not burdening future generations, and we're on track to drive public debt down by 2024-25."
The ONS also cut its estimate for borrowing during the previous financial year by £7.2bn to £144.6bn, although this was still the third-highest financial year borrowing total since records began in 1947.The ONS also cut its estimate for borrowing during the previous financial year by £7.2bn to £144.6bn, although this was still the third-highest financial year borrowing total since records began in 1947.
"The lower-than-expected public borrowing of £18.6bn in April and the downward revisions to borrowing in 2021/22 will only add to the pressure on the chancellor to go big when finalising the imminent support package for households," said Paul Dales, chief UK economist at Capital Economics. "The lower-than-expected public borrowing of £18.6bn in April and the downward revisions to borrowing in 2021-22 will only add to the pressure on the chancellor to go big when finalising the imminent support package for households," said Paul Dales, chief UK economist at Capital Economics.
"We think any support will be small and targeted rather than big and widespread.""We think any support will be small and targeted rather than big and widespread."