Britain’s public sector net borrowing posted a record high for the month of August as interest payments on government bonds shot up because of higher inflation.
Net borrowing came in at £15.3bn, a highest for the month of August since records began in 1993, the Office for National Statistics said on Tuesday. Analysts had forecast a Public Sector Net Borrowing (PSNB) of £12.51bn.
“It’s worrying that … higher spending has more than offset higher VAT receipts,” said Hetal Mehta, of Daiwa.
The government’s preferred measure on which fiscal forecasts are based, PSNB excluding bank rescues, came in above forecasts at £15.9bn.
The ONS said the deterioration in the public finances was mainly due to higher interest payments on gilts, as a result of the rise in the retail price index.
Interest payments were £3.8bn in August compared with £1.3bn a year ago.
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