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Government borrowing came in lower than expected last month despite a hit from the highest debt interest payments ever seen for the month of July.
The Office for National Statistics (ONS) said the interest payable on central government debt was £7.7bn while borrowing during the month was the fifth highest for the month of July on record.
That sum came in at £4.3bn – £700m lower, however, than economists polled by the Reuters news agency had expected.
It took borrowing over the first four months of the financial year to £56.6bn, almost £14bn up on the same period in the last financial year.
The public finances – soured initially by the effects of the COVID pandemic and government support for individuals and businesses – were later harmed further by the cost of living crisis.
Last year’s energy price surge gave rise to a £40bn bill to cover off the worst of the rises in household and corporate gas and electricity costs which were mostly a consequence of Russia’s invasion of Ukraine.
The Treasury has responded to the pressure on the public purse by imposing a higher tax burden – a scenario it would look to partly reverse next year ahead of a general election.
While things like VAT receipts have been boosted due to higher inflation, the effects have had a negative effect too.
The interest bill of £7.7bn for July is a consequence of vast swathes of government debt being linked to the rate of inflation.
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