- UK borrowing jumps more than 30% in May compared with the same month a year ago – and is higher than any May since 2020
- Debt interest hit a record for May, accounting for almost half of the £23.3 billion borrowed
- Cash coming in rose by £3.4 billion compared to the previous May but was offset by increased costs of providing public services and benefits
Danni Hewson, AJ Bell head of financial analysis, comments on the latest public sector finances:
“Today’s borrowing figures are a chillingly well-timed reminder to any would-be prime minister that the bond markets matter when a country is carrying as much debt as the UK currently is.
“Debt interest hit a record high for May, and at £11.7 billion it accounted for almost half of the staggeringly high £23.3 billion borrowed by the government.
“Much of the increase in debt interest was down to higher inflation, which jumped up between February and March as conflict erupted in the Middle East. This also added to the day-to-day costs of providing public services as the year progressed.
“The last time borrowing for the month of May exceeded what was required to plug the gaps was right at the start of the pandemic when the government raided its coffers to cover the wages of millions of workers furloughed because of lockdowns.
“Long-term borrowing costs have been creeping up and will be monitored closely if the anticipated Labour leadership contest gets underway, following Andy Burnham’s return to Parliament after a win in the Makerfield by-election. Burnham has drafted in economic heavyweights to help shore up his credentials and has pledged to follow the existing fiscal rules, which includes not borrowing to fund day-to-day spending.
“It’s a good job that pledge is based on a future budget because the current budget deficit in the year to May is already £7 billion more than it was this time last year, and £6 billion more than had been forecast by the OBR. And that’s despite the positive impact of tax changes which padded out the Treasury coffers to the tune of £3.4 billion in the month of May.
“There has been better than expected news on the economic front when it comes to inflation, and if the US and Iran can actually get around the table to hammer out some of the finer details of the peace deal, prices should continue to fall back.
“Whilst the government can’t control external geopolitics, the country needs to be ready to take advantage of any positive momentum and not get caught up in a long, destabilising fight for Number 10.”
