UK's debt burden increases

9/25/2022 5:35:26 AM

(MENAFN) The Office for National Statistics (ONS) announced this week that the amount of interest due on the debt held by the British government has reached its highest level ever.

According to the ONS, the interest payable was £8.2 billion ($9.25 billion) last month, which is $1.5 billion ($1.7 billion) more than in August 2021 and the highest monthly total since records began in April 1997. The ONS also stated that the inflation rates are largely to blame for the fluctuation in the interest payable.

Inflation in the UK reached a 40-year high of 9.4% in June before dropping to 8.6% in August.

The Office for Budget Responsibility had predicted that the UK government would borrow £6 billion ($6.7 billion) in August, but instead, the public sector spent £11.8 billion ($13.3 billion), exceeding its receipts of taxes and other income, according to the ONS.

According to the ONS, the amount of public sector net debt excluding public sector banks was approximately 96.6% of GDP, up 1.9% from the same time last year.

Markets are worried that the package of business and household support measures announced by Prime Minister Liz Truss will increase borrowing and result in a sharp increase in interest rates from the Bank of England.

The British pound plunged to its lowest level versus the US dollar since 1985 in September as a result of the nation's economic unrest.

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