UK Government borrowing drops but debt remains at historical highs

Government borrowing was lower than expected last month, falling to its lowest point in any December in four years, the Office for National Statistics (ONS) has said.

ONS data suggested public sector net borrowing hit £7.8 billion during the month.

That was £8.4 billion less than a year earlier and the lowest in any December since 2019. Experts had expected it to reach £11.4 billion.

However, debt remains at historical highs and still at levels not seen since the early 1960s.

Part of the drop was due to the re-evaluation of the value of student loans a year ago, which added £10 billion to the government’s books at the time.

The interest that the government paid on loans was £4 billion in December 2023, which is £14.1 billion less than a year earlier.

That is largely because inflation – as measured by the Retail Prices Index – has dropped from its peak.

Total net debt was £2.69 trillion at the end of the year, which is around 97.7% of the size of the economy, or gross domestic product (GDP).

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Despite the fall in net borrowing last month, the debt to GDP ratio is 1.9 percentage points above last December and still at levels not seen since the early 1960s.

“Protecting millions of lives and livelihoods during Putin’s energy shock and a once-in-a-century pandemic has created economic challenges,” said Chief Secretary to the Treasury Laura Trott.“

However, it is right that we pay back these debts so future generations are not left to pick up the tab.

“Because of this Government’s decisive action, the economy is now beginning to turn a corner. Inflation has more than halved.

“Debt is on track to fall as a share of the economy. And we have been able to afford tax cuts for 27 million working people, and an £11 billion tax cut to drive business investment.”

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