- Government borrowing £14.3 billion in November – higher than analysts had forecast
- Government took £77.6 billion in tax and other receipts – a record for November
- But increased wage and benefits cost pushed up spend
Danni Hewson, head of financial analysis at AJ Bell, comments on the latest UK public sector finances:
“Inflation has been a double-edged sword for public sector finances. On the one hand frozen thresholds combined with inflation busting pay increases and increased VAT as the cost of goods has shot up have helped increase the tax take by almost £3 billion compared to the same period last year.
“But on the flip side uprated benefit costs to pay those wage increases and another hefty interest bill on all that debt have gobbled up the additional income and left the government still needing to balance the books by borrowing.
“Even with the end of those energy support schemes the government was forced to forage through the branches of the much-denuded magic money tree, and though borrowing was down on the same period last year, debt has jumped 1.8% higher to come in at 97.5% of GDP.
“There’s no question yesterday’s cooler than expected inflation numbers will make the government’s job easier in 2024 and there’s already plenty of speculation that the anticipated headroom is being earmarked for additional tax cuts as the country heads into a general election.
“But longer term there are big questions raised in this latest set of figures.
“In an ideal world growth would enable the country to pay down the debt whilst improving public services and cutting taxes.
“But meaningful growth has proved elusive which suggests tough decisions are ahead for this chancellor or the next.”
