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UK government borrowed less than expected last year UK government borrowed less than expected last year
(32 minutes later)
The UK government borrowed less than expected last year, despite supporting households with their energy bills and facing higher borrowing costs. The government borrowed less than expected last year, despite spending heavily on helping with energy bills and facing higher borrowing costs.
Borrowing, the difference between spending and tax income, was estimated at £139.2bn in the year to 31 March, official figures show. Borrowing, the difference between spending and tax income, was estimated at £139.2bn in the year to 31 March.
That was £18.1bn more than in 2021-22 but less than the £152bn predicted by the government's forecaster last month. That was less than had been predicted and gives ministers "wiggle room" for possible tax cuts ahead of the next election, one analyst said.
It gives government "wiggle room" ahead of the next election, one analyst said. The chancellor said the government was still borrowing "eye-watering sums".
Despite this, borrowing for the 2022-23 financial year was equivalent to 5.5% of the value of the UK economy - the highest percentage since 2014, excluding the pandemic. The amount borrowed last year was equivalent to 5.5% of the value of the UK economy - the highest percentage since 2014, excluding the pandemic.
Borrowing last month was £21.5bn, the second-highest March borrowing figure since monthly records began in 1993. However, the borrowing figure was lower than the £152bn predicted by the government's forecaster, the Office for Budget Responsibility, at the time of the Budget last month.
The ONS said a rise in tax receipts was offset by higher spending on energy support for households and businesses.
The government has also been borrowing more to cover the interest on its debt, which has risen due to inflation.
How does government borrowing work?How does government borrowing work?
The Office for National Statistics (ONS) said the government borrowed £21.5bn in March alone, the second-highest March figure since monthly records began in 1993.
Chancellor Jeremy Hunt said: "These numbers reflect the inevitable consequences of borrowing eye-watering sums to help families and businesses through a pandemic and [Vladimir] Putin's energy crisis.Chancellor Jeremy Hunt said: "These numbers reflect the inevitable consequences of borrowing eye-watering sums to help families and businesses through a pandemic and [Vladimir] Putin's energy crisis.
"We were right to do so because we have managed to keep unemployment at a near-record low and provided the average family more than £3,000 in cost-of-living support this year and last.""We were right to do so because we have managed to keep unemployment at a near-record low and provided the average family more than £3,000 in cost-of-living support this year and last."
However, he said the UK could not "borrow forever" and had a clear plan to get debt falling. All in all, the ONS said public sector net debt at the end of March 2023 was £2.53 trillion - equivalent to around 99.6% of the value of the whole UK economy and a level not seen since the early 1960s.
All in all, the ONS said public sector net debt at the end of March 2023 was £2.53 trillion - equivalent to around 99.6% of the value of the whole UK economy. Mr Hunt has said he plans to get debt falling as a share of output - or GDP - in five years' time.
That is a level not seen since the early 1960s.
Mr Hunt has said he plans to get debt falling as a share of output - or GDP - in five years' time.
Yael Selfin, chief economist at KPMG, told the BBC's Today programme: "The way things are at the moment it doesn't look like he will meet that target but it wouldn't be the first time a chancellor doesn't meet a target.Yael Selfin, chief economist at KPMG, told the BBC's Today programme: "The way things are at the moment it doesn't look like he will meet that target but it wouldn't be the first time a chancellor doesn't meet a target.
"The important thing is that he still has the confidence of the markets so in the longer term, debt will go down and we won't have similar episodes like we had from last year.""The important thing is that he still has the confidence of the markets so in the longer term, debt will go down and we won't have similar episodes like we had from last year."
The government's borrowing costs jumped last year as interest rates rose around the world and spiked after former chancellor Kwasi Kwarteng proposed a swathe of tax cuts without explaining how he would fund them.The government's borrowing costs jumped last year as interest rates rose around the world and spiked after former chancellor Kwasi Kwarteng proposed a swathe of tax cuts without explaining how he would fund them.
Mr Hunt reversed most of the plans easing concerns on financial markets. However, borrowing costs remain relatively high and the UK is set to be one of the worst performing major economies in the world this year, according to the International Monetary Fund.Mr Hunt reversed most of the plans easing concerns on financial markets. However, borrowing costs remain relatively high and the UK is set to be one of the worst performing major economies in the world this year, according to the International Monetary Fund.
The fact annual borrowing for 2022-23 was substantially lower than expected will give the chancellor "more wiggle room to cut taxes or raise spending ahead of the next general election", said Ruth Gregory at Capital Economics. The lower-than-expected borrowing for 2022-23 will give the chancellor "more wiggle room to cut taxes or raise spending ahead of the next general election", said Ruth Gregory at Capital Economics.
"With the next election fast approaching we wouldn't be at all surprised to see a further fiscal loosening in the Autumn Statement, on top of the £21.9bn (0.8% of GDP) giveaway in 2023/24 announced in the spring. "With the next election fast approaching we wouldn't be at all surprised to see a further fiscal loosening in the Autumn Statement, on top of the £21.9bn (0.8% of GDP) giveaway in 2023-24 announced in the spring.
"That said, with both parties likely to stick to current plans to bring down public debt as a share of GDP, a sizeable fiscal tightening will still be required after the election, whoever is in charge.""That said, with both parties likely to stick to current plans to bring down public debt as a share of GDP, a sizeable fiscal tightening will still be required after the election, whoever is in charge."
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