KPMG comments on today’s public sector finances data

“Government borrowing is set to enter an upward trajectory” says Michal Stelmach, senior economist at KPMG UK.

“Public sector net borrowing was £20 billion in September, up by £2.2 billion on a year earlier. This reflected the £900 million disbursement of cost of living payments to those on disability benefits and £360 million to families receiving tax credits, coupled with the ongoing pressure on debt interest spending.

“We expect the fiscal position to only worsen from October onwards, with the Government’s energy price guarantee for households and businesses in place, on top of the second cost of living instalment and the support for pensioners.

“The Chancellor is still facing a shortfall of at least £30 billion to meet his fiscal mandate. It would be easier to achieve this if he reverted to the previous measure of debt that includes the Bank of England, as the loans maturing under the Term Funding Scheme are expected to reduce public sector debt by over £100 billion in 2025-26. However, that would only provide short-term relief before debt starts to rise again as a share of GDP.”

-Ends-

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