Key events
Jeremy Hunt, the chancellor, has reaffirmed his position that the UK is facing “tough decisions” to reduce government borrowing.
The prospect of increased borrowing (via big but unspecified tax cuts) was one of the key factors in the rapid removal of Liz Truss and Kwasi Kwarteng as prime minister and chancellor in October after less than two months. Hunt was brought in to steady the ship – a task he has essentially argued requires a programme of deficit reduction to rival the early years of the Conservative government.
Hunt on Wednesday said:
Faced with the twin global emergencies of a pandemic and Putin’s war in Ukraine, we have taken significant action to support millions of businesses and families here in the UK.
We have a clear plan to help halve inflation next year, but that requires some tough decisions to put our public finances back on a sustainable footing.
UK government borrows record £22bn in November
Good morning, and welcome to our rolling, live coverage of business, economics and financial markets.
The UK government borrowed £22bn in November, a record amount for the month amid giant energy price support schemes for homes and businesses across the country.
The Office for National Statistics (ONS) said November borrowing was £13.9bn more than the same month in 2021, and the highest November borrowing since monthly records began in 1993.
The government’s energy price guarantee for households and equivalent support for businesses are expensive interventions, requiring a need for months of big borrowing. Energy prices have risen so sharply during 2022 because of Russia’s invasion of Ukraine, and the consequent turmoil in global energy supplies.
Public sector net borrowing (excluding banks bailed out during the financial crisis) was £105.4bn in the financial year to November 2022, the fourth highest year-to-date total since 1993 and £50.8bn higher than 2019, before the government launched huge spending schemes to protect the UK economy during coronavirus lockdowns.
The effects of rising inflation are also becoming clearer: the UK borrows a large amount by issuing index-linked gilts (UK government bonds, known as linkers, whose payouts are tied to the retail prices index of inflation). Rising inflation has pushed up those payments to bondholders, so central government debt interest payable was £7.3bn in November 2022, £2.4bn more than in November 2021 and the highest November figure since monthly records began in April 1997.
The agenda
11am GMT: Confederation of British Industry (CBI) retail data (December; previous: -19 points; consensus: -23 points)
