UK borrowing jumps to second-highest June rate since records began as soaring inflation bites

Government borrowing jumped last month, hitting its second-highest ever June levels

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The Office for National Statistics (ONS) said borrowing was £4.1billion more in June than the same month a year ago.

Spending rose by £9billion to £86billion as borrowing hit £22.9billion.

This is primarily because interest payments increased by £10.3billion, compared to this time last year.

Responding to the latest figures, Chancellor Nadhim Zahawi insisted the Government is "taking action" to address the bleak economic picture the country finds itself in.

UK borrowing has risen in June
UK borrowing has risen in June
Chancellor Nadhim Zahawi
Chancellor Nadhim Zahawi

He said: “We recognise that there are risks to the public finances including from inflation, with debt interest costs in June more than double the previous monthly record.

“That’s why the Government has taken action to strengthen the public finances, and in their latest forecast the OBR assessed that we are on track to get debt down.”

On Wednesday, the rate of Consumer Prices Index inflation rose to 9.4 percent in June from 9.1 percent in May.

This is the highest level since February 1982 and piles further pain on cash-strapped households and businesses.

Grant Fitzner, chief economist at the ONS, said: “Annual inflation again rose to stand at its highest rate for over 40 years.

“The increase was driven by rising fuel and food prices, these were only slightly offset by falling second-hand car prices.”

Adam Seagrave, UK Sales Trader at Saxo Markets, said: "News that inflation has reached a 40-year high does not bode well for short-term consumer spending with the understanding that prices of food, energy and fuel will continue to rise going into 2023.

"The rate has seen an unexpected increase this month, largely driven by petrol prices rising at their fastest rate since the 1980s. Despite this, it is likely consumers could get some relief with prices at the pump falling from record highs over the next couple of weeks as demand levels out.

"There are further concerns for the winter months ahead with the inflation rate expected to rise significantly again when energy prices jump in October – which will only add to the already mounting costs and pressures on millions across the UK."