Last year saw interest payments on the UK’s national debt rise to their highest ever level.
The Government’s statistics department has since revealed that the debt pile stood at £2.3 trillion last month, with interest payments rising to nearly £70 billion. Both totals stand as record amounts according to the Office of National Statistics.
Government borrowing fell to half of 2020’s rate last year as schemes such as furlough. However, it must be noted that 2021 nonetheless stood as the third highest year on record for public borrowing in the UK.
The UK’s borrowing state deficit hit £151.8 billion in the last 12 months, compared to £317.6 billion in the 12 months prior to this.
Despite a fall in borrowing, the government still borrowed £24 billion more than anticipated in 2021.
Rishi Sunak told the government that heavy borrowing throughout the Covid pandemic had left the UK government burdened with great debt.
Sunak told Sky that “Public debt is at the highest levels since the 1960s and rising inflation is pushing up our debt interest costs, which mean we must manage public finances sustainably to avoid saddling future generations with further debt.”
The PM further added that while the economy was strengthening, alongside the prospects of improving public finances, it could not be forgotten that earlier borrowing had left a massive debt legacy.
However, tax income grew widely in the past year, from £943 billion in 2020 to £618.9 billion in 2021.
AJ Bell Financial Analyst, Danni Hewson said that “This is a real glass half full moment for the UK economy. The phasing out of covid restrictions and the end of support measures like the furlough scheme have helped the country surge back to its feet.”
Hewson noted that it is important to remember that higher inflation was also likely to be playing a highly significant role in the higher tax receipts.
Hewson further added that whilst “borrowing in March was significantly down on the same period last year it was still almost £12bn above what was needed pre-pandemic, the second highest on record for the month and up on the amount borrowed just the month before.” This aligns with government borrowing reaching the second highest on record for the month since records began in 1947.
This news comes at a point where UK households are facing a major cost-of-living crisis in the face of increased council tax, increased National Insurance payments and skyrocketing energy bills. Further, to add to this, inflation hit a 30-year-high earlier this month of 7%.
The UK’s Armed Forces Minister, James Heappery, told Sky that there was “no doubt that these interventions are expensive – £22bn of government intervention to assist families with their cost of living is already huge,” he said.
In response to calls to intervene with struggling UK households, Sunak reported that the government would be assisting with the provision of a £22 billion package of support which would additionally to get people back into employment. Additionally, plans are being introduced to cap the interest rates on student loan repayments.