- March borrowing surges to second highest since records began with energy support schemes estimated to have cost £41.2 billion
- But borrowing to FYE 2023 was £13.2 billion less than originally forecast by the OBR
- Grocery inflation falls slightly to 17.3%
Danni Hewson, head of financial analysis at AJ Bell, comments on the latest UK public finances and Kantar grocery inflation numbers:
“Helping households keep the lights on was the right thing to do, but it’s come at a massive cost to the public purse. Borrowing over the past year hasn’t broken records which were set during the pandemic and in the wake of the financial crash, but FYE 2023 will certainly be one for the history books.
“The various incumbents of Number 11 have had to juggle a spike in interest payments on past debt whilst also dealing with a variety of other pressures, not least those of their own making.
“The current Chancellor has set himself what seems to be the impossible target of getting debt falling as a proportion of GDP in just five years’ time. Inflation is expected to continue cooling and energy support measures should become obsolete, but there is a worrying number in this latest data.
“Whilst borrowing was significantly less than the OBR had previously forecast, revenue also fell short, and though consumer and business confidence has picked up over recent months, economic growth has flatlined.
“Mr Hunt may have told business leaders he wants to bring down taxes as soon as growth allows but there’s little clarity on where that growth is going to come from.
“The tax take is up a bit, and windfall taxes and inflation-fuelled VAT payments have also bolstered coffers, but the social care levy has fallen by the wayside, and with employers becoming more cautious about their hiring intentions, there are big questions about the direction of the UK economy.
“For most households the state of the government’s finances is far less important to them than the news that food price inflation finally seems to have cooled.
“To be clear, prices are still shooting up at a ridiculously uncomfortable level that’s making every shopping trip something to be endured.
“Consumers are trying every trick in the book to keep their final bill at manageable levels, but with the Spanish weather once again playing havoc with some salad supplies, people will take this downward trend with a large, and now more expensive, pinch of salt.
“People are finding ways to budget for the things that make life worth living, like plentiful supplies of chocolate eggs, but that’s coming at the cost of other expenditure.
“Inflation-weary has become a well-used phrase but it’s what we are all feeling and even if inflation has finally peered over the peak, the reality is higher prices aren’t going anywhere any time soon.”
