- Borrowing in December fell to £7.8 billion – the lowest since December 2019
- Debt interest payments £14.1 billion less than December 2022
- Overall debt now 97.7% of UK GDP – up 1.9% on same period a year ago
Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK public sector finances:
“For a chancellor hoping to fund a series of crowd-pleasing tax cuts in the not-too-distant future, the latest health check on public sector finances will be cause for celebration.
“Borrowing has fallen significantly due to the impact of cooling inflation on debt interest payments and the end of expensive energy schemes that had cushioned UK households from the worst impact of last year’s volatility.
“There’s also more cash coming into the coffers thanks to that sneaky fiscal drag, which has helped boost the income tax take, and the flip side of those rising prices that have cost the government dearly is that VAT receipts are also up significantly on the same time last year.
“But the numbers still don’t add up. The government’s still spending more than it’s got coming in, but crucially, even though borrowing for the current financial year clocks in at the fourth highest reading on record, it is a whopping £5 billion below where the OBR forecast we would be – fertile ground on which Jeremy Hunt can plant nourishing rabbit food with just enough time for the seeds to take root ahead of the first of his anticipated fiscal set pieces in March.
“Whatever he is able to reap in a couple of months’ time will deplete the Treasury’s ability to spend the next time the country has to weather an economic storm. Relieving some of the tax burden that has weighed on our personal finances might be a vote winner, but without an economy firing on all cylinders there will be big questions about what’s left in the tank. Debt to GDP is almost two percent higher than it was a year ago and the path back from that brink looks hard going.”
