New figures on UK borrowing and debt are misleading
22 July 2022
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In the Media
Len Shackleton writes for CapX
22 July 2022
In the Media
Victoria Hewson quoted in City AM
22 July 2022
Lifestyle Economics
15 November 2024
Julian Jessop quoted in The Express
IEA Economics Fellow Julian Jessop has been quoted in The Express commenting on UK debt interest payments.
Reflecting on the misleading nature of new figures on government borrowing and debt, Julian said:
“The headlines have predictably focused on the jump in debt interest costs. This was not remotely a surprise. Indeed, the £19.4billion figure for June was actually a little lower than the OBR forecast of £19.7billion.”
“It is potentially misleading to suggest that the government actually paid out £19.4billion in debt interest last month or to compare this figure to recurring annual spending on, say, defence or education.
The increase in debt interest costs is not really about the level of debt, either. Inflation is increasing the cost of index-linked gilts, but the real interest rates on this borrowing are still negative and inflation is helping the public finances in other ways. In particular, higher nominal incomes and prices mean that households and businesses are likely to pay far more in tax than anticipated.”
Read the full article here.
Reflecting on the misleading nature of new figures on government borrowing and debt, Julian said:
“The headlines have predictably focused on the jump in debt interest costs. This was not remotely a surprise. Indeed, the £19.4billion figure for June was actually a little lower than the OBR forecast of £19.7billion.”
“It is potentially misleading to suggest that the government actually paid out £19.4billion in debt interest last month or to compare this figure to recurring annual spending on, say, defence or education.
The increase in debt interest costs is not really about the level of debt, either. Inflation is increasing the cost of index-linked gilts, but the real interest rates on this borrowing are still negative and inflation is helping the public finances in other ways. In particular, higher nominal incomes and prices mean that households and businesses are likely to pay far more in tax than anticipated.”
Read the full article here.
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