Debt interest payments reached £8.2bn in August
Interest payments on government debt reached £8.2 billion in government finances in August, a record figure for the month that reflects the surge in RPI inflation linked to index-linked government bonds.
Today’s £1.5bn increase from the same month a year earlier contributed to higher-than-expected spending of £73.2bn as government borrowing reached £11.8bn in the month. The city had expected a capital figure of around £8.5 billion.
There was better news for new Chancellor Kwasi Kwarteng with downward revisions to loan estimates for fiscal year 2021/22 and the early months of the current year.
However, the recently announced energy price guarantee and a package of tax cuts worth at least £25bn a year will put further strain on public finances.
Capital Economics said today it believes borrowing will be closer to £165 billion or 6.5% of GDP by 2022/23, rather than the £99 billion or 3.9% of GDP set by the Office for Budget Responsibility is predicted.
Tariffs rise cause fuel sales pressure
The prospect of another aggressive rate hike kept pressure on Wall Street stocks ahead of tonight’s decision by the US Federal Reserve.
The Dow Jones Industrial Average lost 1% last night and is at its lowest level in two months, a performance matched by the S&P 500 and the tech-focused Nasdaq.
The declines reflected fears of a hard landing for the US economy if the Fed funds rate rises by at least 0.75% later in the day.
The FTSE 100 index ended 0.6% lower last night and the FTSE 250 fell 1.4%, with a pause in selling pressure expected today as investors stay on the sidelines for the decision and subsequent comments from the Federal Reserve President Jerome Powell.
Michael Hewson, chief market analyst at CMC Markets, said: “There are voices calling for 100 basis points. However, this could come as a knee jerk and indicate that the Fed is panicking and sending a completely wrong message to the markets. can send.
“The Fed needs to show that it is in control of events and raise interest rates by 75 basis points, but also indicate that further substantial rate hikes will follow until there is clear evidence that inflation is beginning to decline at a sustainable pace.”