National debt interest payments hit record £70bn | Economic news
Interest payments on the national debt hit their highest level last year as UK public finances reel from the huge cost of the pandemic.
The government’s statistics department said the debt stood at £2.3billion last month, with interest payments reaching almost £70billion, a record amount according to the Office of National Statistics (ONS).
Last year, government borrowing was halved from 2020, when the state paid many workers to stay home in a bid to control the spread of COVID-19.
Yet 2021 still ranks third in government borrowing on record. The government deficit reached £151.8bn in the 12 months to March 2022, up from £317.6bn the previous year.
Despite the reduction in the level of borrowing, the government still borrowed £24 billion more than expected last year.
Chancellor Rishi Sunak said while state finances were improving as society reopened, heavy borrowing throughout the pandemic had left the government saddled with debt.
“Public debt is at its highest level since the 1960s and rising inflation is driving up our interest costs on debt, meaning we need to manage public finances sustainably to avoid falling into debt. future generations,” Sunak said.
The phasing out of COVID-19 restrictions has swelled government coffers over the past year, according to the ONS.
Government tax revenue was £619.9bn last year, an increase of £94.3bn from 2020.
“It’s a real glass-half-full moment for the UK economy,” said Danni Hewson, financial analyst at AJ Bell. “The phasing out of covid restrictions and the end of support measures like the furlough scheme have helped the country get back on its feet.”
Hewson, however, pointed out that inflation likely played an important role in boosting tax revenue.
“VAT revenue has increased by £25billion and this spike in prices at the pump as well as the restart of the ‘great journey’ has brought in an additional £5billion in fuel taxes,” he said. declared. But ‘this does not understate the £22.5bn of additional PAYE or the £6.8bn from self-assessment payments’.
The country now faces a cost of living crisis that will only worsen Britain’s public finances.
Many people in Britain are facing rising energy bills, council tax and the effects of a National Insurance tax hike – as well as inflation hitting a 30-year high years of 7% at the beginning of the month.
On Tuesday, a minister warned there was ‘no magic bullet’ to resolve the crisis, as Boris Johnson prepares to ask his ministers to help him find solutions to ease the pressure on the household finance.
Armed Forces Minister James Heappey told Sky News there was “no doubt” any Government intervention would be “expensive”, but added that “cumulatively” a series of measures could “start to do the difference”.
“There is no doubt that these interventions are expensive – £22 billion of government intervention to help families with the cost of living is already huge,” he said.