Next week we will have a new prime minister (again), but the economic problems facing the country will remain the same. This morning’s update from the Office of National Statistics shows public sector net borrowing was £20 billion last month: the second-highest borrowing September record and significantly higher than the Office for Budget Responsibility’s last forecast, which put the figure close to £15 billion.
It’s this rapid rise in borrowing that the markets have turned on in recent weeks
Economists thought borrowing would rise, but even the consensus (roughly £17 billion) was lower than what the government borrowed in practice. While total borrowing for the financial year is slightly below the OBR’s forecast, it is unlikely to stay that way. The Energy Price Guarantee from October is currently estimated to cost the government an additional £10 billion per month. Capital Economics estimates this morning that borrowing for 2022-23 will be around £210 billion — more than double the OBR’s forecast of £99 billion.
Meanwhile debt interest payments are already well above the OBR’s forecast.
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