Interest bill on UK's massive debt to hit £1bn a week

 
Interest bill on UK's massive debt to hit £1bn a week
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Britain's huge debt interest bill remains on course to hit £1bn a week this year, after official data showed the Goverment borrowed £3bn more in April than forecast by analysts. So interest bill on UK's £1.27 trillion debt is about to hit £1bn a week.

Public sector net borrowing excluding one-off payments related to Royal Mail's pension plan and quantitative easing gilt coupon transfers, stood at £11.5bn in April, according to the Office for National Statistics (ONS). This was £1.9bn higher than in April 2013, and much higher than the £8.4bn expected by analysts.

The larger-than-expected deficit helped to push up public sector net debt to £1.27 trillion in April, or 75.6pc of gross domestic product (GDP). The interest on Britain's debt pile is expected to hit £52.1bn this year, according to projections by the Office for Budget Responsibility (OBR) - or the equivalent of £1bn a week.

“Today’s figures show that government’s overall debt has increased by £88bn, or 7.5pc since the same time last year - almost five times what we spend on fighting crime," said Ed Roddis, head of public sector research at Deloitte.

"This coming year, interest on central government debt will pass the £1bn a week milestone. As political parties form their manifestos for the 2015 election, they need to consider spending and policy commitments against the backdrop of this pressure on the public finances.”

The public finances were hit by a 7pc fall in income tax receipts in April compared with the same month last year to £11.1bn, though the OBR said on Thursday that the data were likely to be distorted by the tax shifting that people engaged in last year. Many people moved bonus payments into April 2013 instead of March in order to take advantage of the reduction in the top rate of tax to 45p, from 50p.

The OBR also said April's data did not provide a "meaningful guide to the trend in public sector net borrowing over 2014-15 as a whole" because of the volatile nature of central government spending and local authority borrowing figures at this early stage of the year.

The ONS data showed VAT receipts increased by 4.1pc, to £9.8bn in April, while the stamp duties on shares and properties increased by a third to £1.1bn.

George Osborne, the Chancellor, has set out plans to eliminate both the budget and structural deficit - or the amount Britain needs to borrow even when the economy has recovered - by 2018-19. Revised ONS figures for the 2013-14 tax year showed borrowing totalled £107.4bn - or 6.59pc of GDP - down marginally from an original estimate of £107.7bn, or 6.61pc of GDP.

Britain's budget deficit remains one of the largest in the developed world.

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