Cost of living crisis: Chancellor Rishi Sunak in ‘better position’ to ease pressure as public debt lower than expected | Economic news

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Government borrowing is now £26bn lower than forecast for the financial year so far, putting the Chancellor in a ‘better’ position to ease the cost of living crisis.

Borrowing for the first 11 months of the 2021-22 financial year was £138.4bn, less than half the record £290.9bn from the same period a year earlier.

The figure is on track to be lower than the £183billion forecast by the Government’s Office for Budget Responsibility in October, largely due to higher than expected tax revenues.

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James Smith, research director at the Resolution Foundation, said: “The Chancellor will address the UK’s latest crisis – the the biggest squeeze on income in generationsexacerbated by Russia invasion of ukraine – with public finances in better shape than expected, increasing the chances of significant policy action to support families through the difficult year ahead.”

He said the UK is enjoying an ‘income-rich recovery with tax receipts £37bn above forecast’.

He continued: “The Chancellor should take this opportunity to provide emergency income support to families during this cost of living crisis, starting with a £9billion increase in benefits for people of retirement age. work and retirees.

Chancellor Rishi Sunak hinted he was preparing to support families in the face of the cost of living crisis, saying: “Look at our track record, we’ve supported people – and our tax rules mean we’ve helped people. households while investing in the longer-term economy.”

But he also appeared to play down the improving outlook amid fears that soaring inflation would push up the cost of servicing public debt.

“The continuing uncertainty caused by global shocks means that taking a responsible approach to public finances is more important than ever,” he said.

“With inflation and interest rates still on the rise, it’s crucial that we don’t let debt soar and burden future generations with more debt.”

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Public debt interest payments hit a record £8.2bn for the month of February due to soaring inflation.

The cost of servicing the country’s debt of more than £2,000,000 was £2.8 billion (almost 53%) higher than in February 2021, or 11% of government spending.

The budget deficit stood at £13.1bn last month, £5bn above forecasts and the second highest figure for the month since records began in 1993.

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‘Additional debts’ for people with disabilities facing rising costs

But that overshoot was largely negated by a £4.2bn upward revision to January’s budget surplus.

The amount was £2.4bn lower than the same month last year – but still £12.8bn higher than in February 2020, before the pandemic.

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