UK government borrows record £22bn in November amid energy crisis – Business Live | Business

Martin Beck, chief economic adviser at the EY ITEM Club, pointed out that the ONS said its figures for the energy bill support of households and businesses were “preliminary indicative estimates”, so the data in the next few months may be subject to large revisions, and the economy forecaster.

He said November’s record was “primarily due to the cost of the government’s energy support programme”.

Baker said data so far suggested that borrowing may actually be lower than the OBR’s full-year forecast of £177bn. However, he added:

Given the uncertainty about the future path of energy prices — and the cost of energy price guarantees — and the lack of monthly OBR forecasts as a baseline, it’s nearly impossible to be confident.

A guaranteed £500 increase in energy prices from April next year, and the government’s decision not to continue general support for households and businesses, means the cost of the energy support scheme for 2023-24 should be much lower. As a result, EY ITEM Club expects that public sector borrowing should steadily decrease after this financial year.

The Institute of Chartered Accountants (ICAEW) says Jeremy Hunt will make many important public finance decisions ahead. And not least of all: How will businesses be supported beyond April?

alison ringpublic sector and tax director ICAEW, also raising concerns that investment so far this year is lower than in 2021. The ONS said net investment in the first 11 months of 2022 was £34.4bn, down £1bn on the previous year.

she says:

Chancellor of the Exchequer Jeremy Hunt will take comfort that the year-to-date deficit is just over £100bn, an increase of £5bn and is on track to stay within the latest full-year forecast of £177bn from the Office for Budget Responsibility In the range.

The continued slowdown in public capital investment is worrisome given its importance to growth prospects and future tax revenues, coupled with continued disruption from industrial action.

We are delighted that the Chancellor announced the Spring Budget and accompanying independent fiscal forecasts on 15 March 2023, as it will be the first official budget in 18 months. However, it is important that the Treasury sets out the terms of extending the Energy Bill relief scheme from April 2023 as soon as possible, as waiting until March may be too late for many businesses trying to determine whether they will be viable in 2023.

The British government’s borrowing of 22 billion pounds in November was much higher than the 13 billion pounds expected by economists polled by Reuters.

He said there were several policy decisions working together to drive borrowing Samuel TombUK Chief Economist Pantheon Macroeconomicsa consulting firm.

Public borrowing was boosted in November by the government’s energy and cost-of-living interventions, a decision to reverse April’s national insurance hike, and high inflation.

The Energy Bill Support Scheme cost the government £1.9bn in November, with the Energy Price Guarantee the main driver of the £4.7bn year-on-year increase in subsidies. In addition, social assistance payments were £3.3bn higher than a year earlier, reflecting the Second Living Expenses Supplement paid to working-age welfare recipients.

Divya Sridharan economist PricewaterhouseCoopersAccording to an accounting firm:

Looking ahead, continued energy bill support and the Bank of England’s ninth consecutive interest rate hike announced last week will continue to squeeze public finances. The Office for Budget Responsibility (OBR) has raised its borrowing forecasts for 2022-23 and 2023-24 by £64.2bn and £39.8bn from the first quarter 2022 view.

In the medium term, however, OBR expects the government’s net debt-to-GDP ratio to remain close to 100% of GDP until 2025-26, as the economy recovers and tax revenues increase.

More on public finances later, but European stock markets seem to be opening fairly tamely today.

Trading in the days leading up to Christmas is usually relatively subdued for obvious reasons. The opening price pushed the FTSE 100 up 0.2%.

Here’s a snapshot of the European market opening from Reuters:

• Europe’s Stoxx 600 rose 0.3 percent

• France’s CAC 40 rose 0.2%, Spain’s IBEX rose 0.4%

• Euro Stoxx up 0.2%; Euro zone blue chips up 0.2%

• Germany’s DAX rose 0.4 percent

Chancellor of the Exchequer Jeremy Hunt reiterated his position that the UK is facing “difficult decisions” to reduce government borrowing.

The prospect of increased borrowing (through large but unspecified tax cuts) was one of the key factors behind Liz Truss and Kwasik Watten’s swift ouster as prime minister and chancellor in October, less than two months later. Hunt was brought in to stabilize the situation – a mandate he basically believed required a deficit-reduction plan comparable to the early years of the Conservative government.

hunt Wednesday said:

In the face of two global emergencies, the pandemic and Putin’s war in Ukraine, we have taken major action to support millions of businesses and households here in the UK.

We have a clear plan to help halve inflation next year, but it will require some tough decisions to put our public finances back on sustainable footing.

UK government borrows record £22bn in November