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Autumn Budget 2021 – the challenges facing the Chancellor

Government debt levels

Rishi Sunak has a tough job ahead in next week’s Budget. Last Thursday’s FT reported that “Chancellor Rishi Sunak has been handed a boost ahead of next week’s Budget, with UK public borrowing falling by more than expected in September,” Whilst this is encouraging, dig a little deeper and some points of note are:

  • The fall is compared to the Office for Budget Responsibilities (OBR) forecast in the March Budget. We already know that the economic recovery has been stronger than expected back in March
  • The amount borrowed for the first six months of the year are still a staggering £108bn
  • The interest on the debt for September was £4.8bn compared to £3.2bn forecast by the OBR in March

This last point is worthy of more consideration. The interest bill in September was £1.6bn higher than forecast. For 12 months that is over £19bn! By way of comparison, the National Insurance and Social Care Levy announced last month is due to raise £12bn a year.

Debt servicing costs

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