Rising prices are hitting government coffers and the high street worse than expected (Picture: EPA)
The size of the UK’s public debt has surged unexpectedly as rising prices put more strain on government finances than any time since the height of the pandemic.
A sharp rise in the cost of debt interest payments means the Treasury owes £20 billion as of September, new data from the Office for National Statistics (ONS) shows.
Officials have been blindsided as the figure is well above the £17 billion predicted by economists, and more than a third larger than government estimates calculated in March.
It’s the second-highest September figure since monthly records began in 1983, surpassed only by September 2020 when the government was borrowing historic amounts to fund Covid schemes such as furlough.
Monthly debt figures are typically compared like-for-like due to natural ebbs and flows throughout the year.
Adding to the gloomy picture were increasing signs of a slump on Britain’s high streets.
Retail sales fell further than expected by 1.4% in volume terms, a firm indication that people are doing less shopping due to cost of living fears.
The treasury is in an increasingly weak position to pay back public debt (Picture: Shutterstock)
ONS director of economic statistics Darren Morgan said ‘consumers are now buying less than before the pandemic’.
He added: ‘Drops were seen across all main areas of retailing, with falling sales in food stores making the largest contribution.
‘Retailers told us that the fall in September was partly because many stores were closed for the Queen’s funeral, but also because of continued price pressures leading consumers to be careful about spending.’
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Public finances and shopping have been hit worse than expected by rising prices, new figures show.