May 29, 2024

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UK government borrowing increases as energy bill assistance starts.

Due to the UK beginning to pay for energy support programmes for homes and businesses, government borrowing increased in October compared to the previous year.

The Office for National Statistics (ONS) said that borrowing, which is the shortfall between government spending and tax revenue, was £13.4 billion last month.

The amount was the fourth-highest for October in recorded history and was up £4.4 billion from the previous year.

The amount for October, however, fell short of the economists’ expected £21 billion.

People required assistance to weather the aftershocks of Russia’s invasion of Ukraine, according to Chancellor Jeremy Hunt.

However, he asserted that for Britain to “tackle inflation and ensure the economic stability needed for long-term growth,” the public finances needed to be “put back on a more sustainable path.”

The Energy Bills Support Scheme, under which the government is offering all households £400 toward the cost of their energy bills, made its first payment to homeowners in October. The government lost £1.9 billion due to this, according to the ONS.

A typical household’s annual energy bill is capped at £2,500 under the Energy Price Guarantee scheme, which also supports businesses. It was launched last month.

The ONS calculated that the total cost of these programmes in October was £3.4 billion.

In October, borrowing was “primarily driven by the energy price cap for households, which came into force in October, and the furlough plan ending a year ago, making the annual comparison less flattering,” according to Michal Stelmach, a senior economist at KPMG.

The ONS reported that borrowing in the current fiscal year, which runs from April to October 2022, was £84.4 billion, down from $21.7 billion during the same time last year.

The Office for Budget Responsibility (OBR), the government’s independent forecaster, forecast last week that the public sector will borrow £177 billion this year, the second-highest amount since 1994.

The UK economy was already in a recession, according to the OBR, and it would last “just over a year.”

The OBR’s forecasts were released last week as the government worked to restore the country’s finances by announcing £55 billion in tax increases and spending reductions in the Autumn Statement.