KPMG comments on public sector finances data - Jan 2022

NHS Test and Trace and the booster rollout stretch government spending in December” says Michal Stelmach, senior economist at KPMG UK.

Increased testing efforts alongside the campaign to offer every adult a booster by the New Year meant that public spending on procurement and pay rose by £2.3bn in December on a year ago. We estimate that NHS Test and Trace and the vaccination programme accounted for the majority of the rise, as the race to get jabbed gathered speed before Christmas.

“We expect non-interest spending to continue to fall as the vaccine rollout matures. Nonetheless, with interest spending continuing to rise on the back of elevated inflation and higher interest rates, we have pushed back our forecast for the peak in debt to GDP ratio by one year, to 2022-23.

“Public borrowing will face an uncertain outlook in the coming months, with the looming crunch point over rising household energy bills. In Europe, the UK is one of the few countries which hasn’t introduced any support measures to shield vulnerable groups from higher prices, which will put further pressure on the Government after the next Ofgem price cap is announced on 7 February.”

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Notes to Editors:

 About KPMG

KPMG LLP, a UK limited liability partnership, operates from 21 offices across the UK with approximately 16,000 partners and staff.  The UK firm recorded a revenue of £2.3 billion in the year ended 30 September 2020. KPMG is a global organisation of independent professional services firms providing Audit, Legal, Tax and Advisory services. It operates in 147 countries and territories and has more than 219,000 people working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.