The UK Treasury reported a budget deficit of £24.5 billion for September, a figure that exceeded expectations and reflected rising costs of servicing the national debt.
Official statistics show the government paid £10.9 billion in interest on its debt last month, the largest September amount since records began and only the eighth time a monthly total has topped £10 billion. Rising inflation and higher borrowing costs were cited as key factors pushing up those interest payments.
The surge in debt interest was the main driver of the wider-than-expected shortfall, underscoring how changes in inflation and market rates can quickly inflate public financing costs. The increase in interest spending added to the fiscal strain even before other elements of public receipts and outlays were taken into account.
The figures add to the immediate pressures facing Chancellor John Healey as he finalises plans for next week’s budget. Policy-makers and markets will be watching to see how the government intends to address growing debt-servicing costs and overall borrowing levels in the near term.
While the September numbers highlight the influence of interest rates on the public finances, the Treasury will publish further monthly and annual fiscal data in the coming weeks that will provide a fuller picture of the government’s borrowing trajectory and the impact of its policy choices.