- By Daniel Thomas
- Business reporter, BBC News
The government borrowed less than expected last year, despite spending heavily to support energy bills and facing higher borrowing costs.
The figure was lower than expected and gave ministers “space” to cut taxes before the next election, one analyst said.
The Prime Minister said the government was still borrowing “incredible sums”.
The amount borrowed last year was equivalent to 5.5% of the value of the UK economy – the highest rate since 2014, excluding the pandemic.
However, the borrowing figure is lower than the £152 billion predicted by the government’s forecasting body, the Office for Budget Responsibility, at the time of the Budget last month.
The Office for National Statistics (ONS) said the government borrowed £21.5 billion in March alone, the second-highest figure in March since monthly records began in 1993.
Prime Minister Jeremy Hunt said: “These numbers reflect the inevitable consequences of borrowing huge sums to help families and businesses weather the pandemic and [Vladimir] Putin’s energy crisis.
“We were right to do so because we have managed to keep unemployment at near-record lows and provide the average family with more than £3,000 in cost-of-living assistance this year and last year.”
Overall, the ONS says net public sector debt at the end of March 2023 was £2.53 trillion – equivalent to about 99.6% of the value of the entire UK economy and an unprecedented level. seen since the early 1960s.
Mr Hunt said he plans to reduce debt as a share of output – or GDP – over a five-year period.
Yael Selfin, chief economist at KPMG, told the BBC’s Today programme: “The current situation looks like he’s not going to hit that target but it’s not the first time a prime minister has failed to hit the target. pepper”. .
“What’s important is that he still has market confidence so in the long run the debt will go down and we won’t have periods like last year.”
Government borrowing costs skyrocketed last year as interest rates rose around the world and spiked after former prime minister Kwasi Kwarteng proposed a series of tax cuts without explaining how he would finance them. .
Mr Hunt reversed most plans to ease concerns in financial markets. However, borrowing costs remain relatively high and the UK is considered one of the worst performing major economies in the world this year, according to the International Monetary Fund.
Ruth Gregory at Capital Economics said the lower-than-expected loan for 2022-23 would make the prime minister “more likely to cut taxes or increase spending before the next general election”.
“With the next election fast approaching, we wouldn’t be surprised to see further fiscal easing in the Autumn Statement, alongside a £21.9 billion (0.8% of GDP) bonus ) for the year 2023-24 announced in the spring.
“That said, with both parties likely to stick to current plans to reduce public debt as a percentage of GDP, substantial fiscal tightening will still be required after the election, no matter who is responsible.”