Chancellor blames 'eye-watering sums' spent on pandemic and vitality payments assist for hike in public sector borrowing

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The chancellor has blamed the "eye-watering sums" spent on serving to folks by means of the coronavirus pandemic and vitality disaster for a rise in public sector borrowing.

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Public sector internet borrowing was £21.5bn final month - the second-highest March borrowing since month-to-month data started in 1993.

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This implies that the general public sector spent greater than it obtained in taxes and different revenue, requiring it to borrow the shortfall.

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The quantity additionally capped off the fourth-highest borrowing for a monetary yr since data started - £139.2bn, or 5.5% of GDP.

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Chancellor Jeremy Hunt blamed the COVID-19 pandemic and the rise in vitality costs, which was worsened by Russia's invasion of Ukraine.

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He mentioned: "These numbers reflect the inevitable consequences of borrowing eye-watering sums to help families and businesses through a pandemic and Putin's energy crisis.

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"We have been proper to take action as a result of we now have managed to maintain unemployment at a near-record low and supplied the typical household greater than £3,000 in value of residing assist this yr and final.

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"We stepped up to support the British economy in the face of two global shocks, but we cannot borrow forever. We now have a clear plan to get debt falling which will reduce the financial pressure we pass onto our children and grandchildren."

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The £21.5bn borrowed in March was £14.5bn greater than the quantity borrowed in March 2020, in the beginning of the pandemic.

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Choppy waters forward for the general public funds

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Michal Stelmach, senior economist at KPMG UK, mentioned public sector internet borrowing over the yr was £18bn larger than within the earlier yr, however lower than half of the borrowing seen on the peak of the pandemic.

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This distinction displays "a relatively smaller package of measures to tackle the energy crisis", Mr Stelmach mentioned.

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"Year-to-date outturn has been revised down substantially following the ONS correction to student loans arrangements, which reduces the proportion of student loan spending recorded as government investment," he added.

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"This brings the full-year borrowing figure £13.2bn below the OBR's latest forecast, which already accounted for the impact of that change.

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"Following a rollercoaster of financial shocks, public sector internet debt reached 99.6% of GDP, its highest degree since 1960-61.

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"While the UK is not unique in facing pressures on the public finances, with recent shocks being largely global in nature, we estimate that around a quarter of the increase in gilt yields over the past year could be attributed to UK-specific factors."

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Content Source: information.sky.com

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