UK Government Borrowing Declines

The UK public sector net borrowing decreased in the year ended March, but remained the third-biggest on record, the Office for National Statistics said on Tuesday.

In the financial year ending March 2022, the budget deficit excluding banks totaled GBP 151.8 billion or around 6.4 percent of gross domestic product. Borrowing was less than half of the GBP 317.6 billion borrowed in the same period last year.

However, this was the third-highest borrowing since records began in 1947 and also GBP 24 billion more than the GBP 127.8 billion projected by the Office for Budget Responsibility.

At the end of March, public sector net debt was GBP 2.34 trillion, or around 96.2 percent of GDP.

In March, public sector net borrowing excluding banks decreased by GBP 8.8 billion from the last year to GBP 18.1 billion. Nonetheless, the deficit was GBP 11.9 billion more than in March 2020 and the second-highest for the month of March.

"Public debt is at the highest levels since the 1960s, and rising inflation is pushing up our debt interest costs, which mean we must manage public finances sustainably to avoid saddling future generations with further debt," Chancellor Rishi Sunak said in a statement.

With the outlook for GDP growth and inflation deteriorating, the public finances are unlikely to offer much help to the Chancellor in 2022/23, Bethany Beckett, an economist at Capital Economics, said. Even so, it is still likely that the Chancellor will announce a further fiscal support package to help households cope with the cost of living crisis at the Autumn Budget, the economist added.