New figures on UK borrowing and debt are misleading
Len Shackleton writes for CapX
Victoria Hewson quoted in City AM
Julian Jessop quoted in The Express
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.”
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