Inflation pushes UK debt interest costs to August record

Soaring inflation led interest costs on UK government debt to hit a new record for August.

Interest due reached £8.2bn during the month, £1.5bn more than last year and the highest August figure since records began in 1997, the Office for National Statistics (ONS) said.

The high interest payments come as the government prepares to borrow billions to help households with energy bills.

It will also reportedly unveil £30bn of tax cuts in a mini-Budget on Friday.

The ONS said government borrowing – the difference between spending and tax income – was £11.8bn in August. That is £2.6bn less than August 2021 but £6.5bn more than before the pandemic two years ago.

It is also twice the level forecast for August by the Office for Budget Responsibility, the government’s independent fiscal watchdog.

He said it meant less was being generated in taxes, while the government had to spend more on debt interest payments.