Interest payments on the national debt rose 70 per cent last month to £7.6 billion (compared with a year earlier) – largely because of the impact of inflation on income paid to holders of index-linked gilts, which are inflation-protected government bonds. More worryingly, this was 49 per cent more than the official forecast made in March by the Office for Budget Responsibility (OBR).
It suggests the OBR’s forecast that the government will have to pay £87.2 billion in interest payments (a colossal sum) may be too low, especially since the ONS is not factoring in the most recent inflation figures in its calculations of the monthly bill. Little wonder Rishi Sunak says ‘rising inflation and increasing debt interest costs pose a challenge for the public finances, as they do for family budgets’.
Every time the government borrows to fund additional pay rises, the interest bill rises
He’s not crying wolf. To put that in some kind of context, government spending on education is circa £100 billion.
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