UK interest bill balloons to a record £8.7bn as pandemic borrowing pushes national debt to £2.2 trillion
Warning bells were ringing yesterday at the Treasury after the UK’s debt-interest bill hit a record £8.7billion in June.
Following a year of unprecedented peacetime borrowing, which has taken the country’s debt pile to £2.2 trillion, interest payments have soared to their highest level since records began in 1997, according to the Office for National Statistics (ONS).
The rising payments, triggered by higher inflation, will worry Chancellor Rishi Sunak as he tries to wrangle down the towering debt mountain.
Covid credit: Following a year of unprecedented peacetime borrowing, interest payments have soared to their highest level since records began in 1997
Over the next few years, he is planning to hit a so-called current budget balance, meaning the Treasury would borrow only to invest and not to fund everyday spending.
But that goal is under increasing threat, amid rising interest payments and worries that the pandemic could leave a long-term scar on the economy.
Danni Hewson, a financial analyst at investment platform AJ Bell, said: ‘It’s something that will certainly have the Chancellor taking a long look at his ledger.
‘Going forward he’ll be under pressure to shake that magic money tree to find extra cash to help fuel the recovery, particularly in areas like health and education.’
However, the amount the Treasury pulled in to its coffers was up £9.5bn on last June to £62.2billion, in a sign the economy was recovering from last year’s historic slump.