Rishi Sunak issues warning as interest payments hit December record
Rishi Sunak issues thinly veiled warning against abandoning NI hike saying pounds MUST be balanced after interest payments on £2trillion mountain of debt hit new high for December
- The government borrowed a further £16.8bn in December, as estimated
- Interest payments on the £2 trillion debt soared to a record £8.1billion for the month
- Rishi Sunak highlighted ‘risks’ to public finances amid calls to scrap NI hike
Rishi Sunak issued a thinly veiled warning against scrapping the National Insurance hike today as interest payments on the UK’s £2 trillion debt mountain hit a new record in December.
The Chancellor highlighted the ‘risks’ of soaring inflation and said future generations should not be ‘burdened’ as the latest public finance figures paint a bleak picture.
The government borrowed a further £16.8bn last month, roughly matching estimates. But worryingly, interest on the debt cost £8.1billion, a record for December.
The level was more than double the same month last year, although lower than June’s £9bn.
Tory MPs and ministers have been pushing for the £12billion National Insurance hike due in April to be scrapped or delayed in response to eye-popping rises in energy bills and prices. The levy is intended to boost the NHS after Covid and fund welfare reforms.
The government borrowed a further £16.8billion last month, roughly matching estimates
But Mr Sunak said: ‘We are supporting the British people as we recover from the pandemic with our jobs plan and business grants, loans and tax relief.’
“Risks to public finances, including inflation, make it even more important that we avoid burdening future generations with high debt repayments.
“Our fiscal rules mean we will reduce our debt burden while continuing to invest in the UK’s future.”
Borrowing £16.8bn in December was down £7.6bn from the same month a year earlier, according to the Office for National Statistics (ONS).
Public sector borrowing from the end of March to December stood at £146.8bn – the second highest since records began in 1993.
Public sector debt, excluding public sector banks, stood at £2.34 trillion at the end of the month, around 96% of gross domestic product (GDP).
Public sector debt is at a historically high level in the wake of the coronavirus crisis
Carl Emmerson, deputy director of the Institute for Fiscal Studies, said the Chancellor should be cautious even if borrowing for the year to date was lower than expected.
“Some have suggested that better borrowing figures give the chancellor room to act on the cost of living, for example by delaying the National Insurance contribution hike scheduled for April,” he said. declared.
“The truth is that these numbers make no difference in this calculation. Mr. Sunak could certainly find money to delay tax hikes or find other unique ways to support living standards, such as increasing benefits in April with a more up-to-date measure of inflation.
“But the long-term pressures on public services, particularly health care and social services, remain the same and tax increases will likely be needed if they are to be met.
“If he acts now on the cost of living, Mr Sunak will also have to find a credible way to commit to acting decisively on public finances in the not too distant future.”