TOP News

UK News: Surging inflation pushes cost of servicing govt debt to December record of £8.1bn

Crisis as energy costs in factories surge as much as £1m a month

  Crisis as energy costs in factories surge as much as £1m a month A surge in the cost of power has left energy-intensive firms battling the prospect of plant closures and job cuts. Industry groups say a lack of Government support, despite months of discussions with UK Ministers, could mean some manufacturers will soon reach critical levels of financial difficulty.

Interest payments on government debt hit a record £8.1bn for the month of December because of surging inflation, according to official figures.

Chancellor Rishi Sunak says the UK's debt burden must come down despite the risk posed to the public finances by inflation © PA Chancellor Rishi Sunak says the UK's debt burden must come down despite the risk posed to the public finances by inflation

The Office for National Statistics (ONS) said the cost of servicing the country's £2trn+ debt pile was almost 200% or £5.4bn up on December 2020.

It is because half a trillion pounds worth of government bonds are linked to the Retail Prices Index (RPI) measure of inflation which stood at 8.4% in December - its highest level since 1991.

In December, the RPI uplift on index-linked gilts was calculated at £5.5bn.

BBC licence fee advert from 1980s resurfaces, showing how bold broadcaster could be when fighting for funding

  BBC licence fee advert from 1980s resurfaces, showing how bold broadcaster could be when fighting for funding A host of famous faces defended the broadcasting corporation after the Culture Secretary Nadine Dorries indicated the licence fee would be axedThe clip was shared on Twitter by BBC actor and radio presenter Adil Ray with the line, “What has the BBC ever given us?” after Culture Secretary Nadine Dorries announced that the next licence fee settlement “will be the last”.

"The recent high levels of debt interest payments are largely a result of movements in the RPI to which index-linked gilts are pegged", the report said.

The additional cost is a burden the chancellor could well do without as the government remains under pressure on many fronts, with a planned National Insurance tax hike in April to fund social care facing a growing Tory backlash as household and corporate bills grow in the face of the inflation problem.

The Treasury's borrowing needs have eased considerably since the end of support schemes such as furlough © Getty The Treasury's borrowing needs have eased considerably since the end of support schemes such as furlough

The main consumer prices index is already at its highest for almost 30 years and tipped to shoot up further when an adjustment to the energy price cap is made that could, according to industry experts, see average bills hit £2,000 annually without government intervention.

"Getting an eartake": Collective bargaining with private banks Canceled

 After the termination of collective bargaining for Germany's private banks, Verdi runs the strike preparations. "We started the strike planning last night," said the negotiator of the union, Jan Shusheck, on Tuesday of the German Press Agency. "We will certainly start the strikes in the next few weeks and expand. Yesterday's course has led to a great displeasure with us and with our members. "First work of work could give it in the coming week.

UK economist at Pantheon Macroeconomics, Samuel Tombs, said of the ONS data: "Surging inflation is making the chancellor's task of returning the public finances to a sustainable footing much more difficult."

Rishi Sunak said of the figures: "We are supporting the British people as we recover from the pandemic through our Plan for Jobs and business grants, loans and tax reliefs.

"Risks to the public finances, including from inflation, make it even more important that we avoid burdening future generations with high debt repayments.

"Our fiscal rules mean we will reduce our debt burden while continuing to invest in the future of the UK."

The wider ONS figures showed that the government borrowed less than economists had expected last month.

Public sector net borrowing, excluding the effects of bank bailouts during the financial crisis, totalled £16.8bn.

It took the amount from April to December to £146.8bn - £129bn less than at the same point in the 2020/21 financial year when the COVID-19 crisis demanded an unprecedented rise in peacetime spending to support the economy and health services.

The ONS said the year-to-date total included a £6bn downward revision to borrowing up until November.

Corporate tax revenues hit £5.5bn in December - a record at current prices - and largely explained by large companies paying their tax bills quarterly.

interest fears Press DAX for the start of trading far down .
On Thursday it goes first for the DAX after the Fed interest rate decision on the eve first. © Provided by finanzen.net Yasuyoshi Chiba / AFP / Getty Images The DAX started the session 1.48 percent weaker at 15.229.98 points. The interest fears previously accrued after the US Federal Reserve Session will miss the German stock market on Thursday a belonging damper. Otherwise, investors' focus is on the ride receiving quarterly reporting season.

See also