UK government borrowing jumps over forecast to £18.3bn in August as ‘fiscal straightjacket’ tightens – business live

Rolling coverage of the latest economic and financial newsThe cost of servicing the UK’s national debt has hit a record high for any August, as rising inflation drove up interest payments.Today’s public finances show that central government debt interest bill was £8.8bn in August – the highest August figure since monthly records began in 1997.Higher debt servicing costs absorb a greater share of government revenues, reducing fiscal room and leaving the public finances more exposed to future economic shocks.“A better near-term borrowing outturn would help, but it would not remove the pressure created by higher government borrowing costs. Thirty-year gilt yields recently reached their highest level since 1998, which matters because it raises the cost of long-term financing at a time when fiscal room is already tight. While higher gilt yields do not feed through into debt interest costs immediately, they make it harder for improvements in the monthly borrowing figures to translate into lasting fiscal headroom. For the Budget, that leaves the government relying not just on better borrowing data, but on some easing in borrowing costs as well.” Continue reading...