Soaring debt interest charges Sunak to borrow £14bn as inflation crisis stings

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Debt interest had already been predicted to cost a record £83billion this financial year, so the sharp rise will raise fears this may be an understatement.

The government has borrowed £35.9bn in April and May so far, which is higher than the OBR’s forecast of £29.5bn deficit for the first few months of the financial year.

However, monthly borrowing is still down from £18billion in May 2021, with tax receipts rising by more than £3billion as the economy recovered, and spending on grants fell. of £4.9bn with the end of furlough and its equivalent support for the self-employed. .

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VAT brought in £14.2bn in the month, a jump of more than 10% on the year. The stamp duty brought in £1.3billion for the Treasury, up almost 80% from May 2021 when the tax exemption was still in place.

Tax revenue paid as you earn rose from £1.4bn to £16.3bn on the strong jobs market. Compulsory social security contributions jumped more than 15% to £14.4billion as the Chancellor raised the national insurance rate charged to workers and their employers.

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Mr Sunak said he was “responsible for public finances”.

He said: “Rising inflation and rising interest costs on debt are challenging public finances, as well as family budgets.

“That’s why we’re taking a balanced approach – using our fiscal firepower to deliver targeted aid with the cost of living, while staying on track to reduce debt.”

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