U.K government borrowing almost twice higher than forecasted

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U.K government borrowing hit £11.8 billion ($13.4 billion) in August — £5.8 billion more than was estimated in May by the Office for Budget Responsibility.

The Office for National Statistics also revealed that central government debt interest payable was £8.2 billion last month, the highest August figure since monthly records began in 1997.

The ONS said the soaring figure was down to high inflation on index-linked gilts.

Industry commentators say all eyes are on new finance minister Kwasi Kwarteng, who is preparing to announce a mini-budget this Friday, which is expected to reveal the government will be borrowing around £200 billion in the next two years.

“Pressure mounts on the new Chancellor Kwasi Kwarteng who gets set to unveil his mini Budget on Friday as critics fear the new government’s planned expansional fiscalism through increased spending and tax cuts could increase public debts further and exacerbate the economy’s inflationary pressures,” said Victoria Scholar, head of investment at interactive investor.

Kwarteng said he pledges to reduce government debt in the medium term.

“However, in the face of a major economic shock, it is absolutely right that the government takes action now to help families and businesses, just as we did during the pandemic,” he added.

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