Government borrowing soars to record £22bn after nearly doubling in a month

Jeremy Hunt blames Covid and Ukraine for woes, as chancellor promises to half inflation in 2023

Chancellor Jeremy Hunt (Stefan Rousseau/PA) (PA Wire)

Borrowing by Rishi Sunak’s government surged to a record £22bn last month following higher interest costs and cost of living payments to households.

The Office for National Statistics (ONS) said state borrowing leapt £13.9bn compared with the same month last year – the highest figure for November since records began in 1993.

Government borrowing has almost doubled since October when the figure stood at £13.5bn.

Chancellor Jeremy Hunt blamed the Covid pandemic and Putin’s war in Ukraine for the country’s economic problems – warning of more “tough” spending decisions and promising to half inflation in 2023.

“Faced with the twin global emergencies of a pandemic and Putin’s war in Ukraine, we have taken significant action to support millions of businesses and families here in the UK,” said Mr Hunt.

He added: “We have a clear plan to help halve inflation next year, but that requires some tough decisions to put our public finances back on a sustainable footing.”

Mr Hunt and the government have refused to budge on public sector pay despite a series of damaging NHS strikes, insisting that pay rises will only add to an inflation spiral.

The latest borrowing figure was ahead of forecasts by economists, who had predicted a figure of £21bn for the month according to a consensus from Pantheon Macroeconomics.

Total public sector spending struck £98.9bn for the month while day to day central government expenditure increased by £13.5bn to £82bn for November, the ONS said.

It said this included a 50 per cent hike in interest payments to £7.3bn, driven by debt interest payments linked to Retail Prices Index (RPI) inflation.

It follows Liz Truss’s mini-Budget disaster, which cost the UK a staggering £30bn, according to Resolution Foundation think tank.

Meanwhile, the government also saw a £3.3bn increase in social assistance costs to £13.2bn, driven by an increase in cost of living payments. Public sector net debt grew by £125.9bn to £2,477.5bn compared to November last year.

It comes as Mr Sunak has refused to rule out the prospect of motorists facing a 12p-a-litre hike in fuel duty in March.

A 23 per cent increase in the duty is pencilled in for March, but chancellors have repeatedly frozen the levy in the past.

Asked to confirm that the rise will not go ahead, the prime minister told MPs on Wednesday that he would not comment on matters which are the responsibility of Mr Hunt.

Treasury select committee chair Harriett Baldwin told him the policy would mean extra taxes of “£6bn a year during a cost of living crisis”, and said there is a need for a “better approach”.

Mr Sunak said: “Tax decisions are those that are made by the chancellor in fiscal statements and that’s the way it should be.”

Mr Hunt will set out a spring Budget on 15 March 2023. The chancellor has also commissioned an Office for Budget Responsibility forecast, which will be presented alongside the Budget.

In November, the OBR forecast that unemployment would rise by 505,000 from 3.5 per cent to peak at 4.9 per cent in the third quarter of 2024.

Inflation was expected to be 9.1 per cent over the course of this year and 7.4 per cent next year, contributing to a dramatic fall in living standards.