This is £1.6 billion more than the same month last year. This was the Office for National Statistics (ONS)’s third release of these figures, which highlight the continued short term fiscal headwinds on the UK government.
Public sector debt has climbed to roughly 95.3% of the country’s gross domestic product (GDP). That’s the highest this has been since the early 1960s. In the first half of the financial year, borrowing exploded to £99.8 billion. This represents an increase of £11.5 billion on the same point last year.
That’s nothing compared to September, when the UK government incurred £9.7 billion in debt interest payments. That’s £3.8 billion in overpayments compared to the level they paid in September last year. These increasing expenses have led to calls for reshaping the future of fiscal policy, including plans to raise taxes.
Tax revenue for September was up majorly, boosted in large part by an uptick in employers’ national insurance contributions. This increase in new revenue is most definitely impressive! However, alongside this positive jump in tax receipts came a significant rise in spending from government over the course of the month.
Chancellor Rachel Reeves will need to address these challenges in her first Budget, due this November. We hope that means she’ll propose some tax increases to start paying down the $77 billion and counting in debt.
“Love tax receipts to be higher,” – Paul Dales, Capital Economics chief economist
Political reactions to the borrowing numbers has played out in similar fashion. Shadow Chancellor Mel Stride criticized the government’s financial management, asserting that the current administration is failing to control public finances effectively.
“Rachel Reeves has lost control of the public finances and the next generation are being saddled with Labour’s debts,” – Mel Stride, shadow chancellor
Chief Secretary to the Treasury James Murray emphasized a more cautious approach, stating that it is essential to “never play fast and loose with the public finances.” This sentiment stands in contrast to the clear message from government—that they want to walk through these financial storms lightly.
The borrowing number for September was released slightly lower than analysts’ predictions of £20.8 billion. This shortfall consequently poses serious questions regarding the UK’s fiscal sustainability and economic stability.