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Government borrowing lower than expected in April Government borrowing lower than expected in April
(about 2 hours later)
Government borrowing was lower than expected in April, although the figure was still the fourth-highest total for the month since records began.Government borrowing was lower than expected in April, although the figure was still the fourth-highest total for the month since records began.
Borrowing - the difference between spending and tax income - was £18.6bn, down £5.6bn from April last year.Borrowing - the difference between spending and tax income - was £18.6bn, down £5.6bn from April last year.
The Office for National Statistics also cut its estimate for borrowing in the previous financial year.The Office for National Statistics also cut its estimate for borrowing in the previous financial year.
One analyst said the figures would put pressure on the chancellor to "go big" on a support package for households.One analyst said the figures would put pressure on the chancellor to "go big" on a support package for households.
With the cost of living rising at its fastest pace for 40 years, there have been calls for the government to provide extra help.With the cost of living rising at its fastest pace for 40 years, there have been calls for the government to provide extra help.
Opposition parties have called for a windfall tax on energy firms, and while the government has resisted such a measure so far, Prime Minister Boris Johnson has said "no option is off the table" to tackle rising living costs.Opposition parties have called for a windfall tax on energy firms, and while the government has resisted such a measure so far, Prime Minister Boris Johnson has said "no option is off the table" to tackle rising living costs.
The ONS 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 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.
However, he added: "We think any support will be small and targeted rather than big and widespread."However, he added: "We think any support will be small and targeted rather than big and widespread."
Recession fears grow as rising prices hit spendingRecession fears grow as rising prices hit spending
Warning of economic downturn as interest rates riseWarning of economic downturn as interest rates rise
Borrowing surged during the pandemic as the government spent billions to support the economy. However, borrowing has fallen back as the economy has recovered and as the government ended measures such as the furlough scheme.Borrowing surged during the pandemic as the government spent billions to support the economy. However, borrowing has fallen back as the economy has recovered and as the government ended measures such as the furlough scheme.
April's borrowing total was lower than expected, with the government's independent forecaster - the Office for Budget Responsibility - having predicted £19.1bn.April's borrowing total was lower than expected, with the government's independent forecaster - the Office for Budget Responsibility - having predicted £19.1bn.
The month saw the first contributions to government revenues of the increase to National Insurance. But spending during April also included the £3bn cost of the council tax rebate, under which many households will receive £150 to help with higher energy bills.The month saw the first contributions to government revenues of the increase to National Insurance. But spending during April also included the £3bn cost of the council tax rebate, under which many households will receive £150 to help with higher energy bills.
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 interest paid on government bonds rises with increases in the Retail Prices Index measure of inflation.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 interest paid on government bonds rises with increases in the Retail Prices Index measure of inflation.
"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."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."
Government debt - the total amount of money owed by the government that has built up over years - stood at £2.35 trillion in April.Government debt - the total amount of money owed by the government that has built up over years - stood at £2.35 trillion in April.
The figure almost exceeds the size of the UK economy, with debt having reached 95.7% of gross domestic product (GDP).The figure almost exceeds the size of the UK economy, with debt having reached 95.7% of gross domestic product (GDP).
A separate survey of companies indicated that growth in the UK's private sector has slowed to its weakest in 15 months.
The monthly purchasing managers' index - which surveys senior managers at companies who take buying and hiring decisions - fell sharply in May to 51.8 from 58.2 in April, although a figure above 50 still implies activity is growing.
Manufacturers reported the steepest drop in export orders since June 2020. A number of goods producers cited Brexit-related trade frictions as the main factor contributing to lower export sales in May, especially in relation to new customs rules, extra documentation requirements and other complexities with EU trade.
Business expectations eased to the lowest for two years in May amid worries about the global economic outlook and downbeat projections for consumer spending.