Inflation pushes UK debt bill to highest in developed world

First reported in the Financial Times, this has been driven primarily by persistently high inflation. The ratings agency also says the Treasury is on course to spend £110bn on debt interest in 2023 – with this figure making up 10.4% of total government revenue.  

Ed Parker, global head of research at for sovereigns and suprnationals at Fitch, said: “We’ve had a very large inflation shock which is adversely affecting the public finances and that is obviously a key driver of the sovereign credit rating.”  

It comes after the agency reiterated in June its negative outlook on the UK’s double A minus credit rating, with Parker now saying a negative outlook signals that a downgrade is more likely than not if current trends continue.  

Additionally, the UK will sit at the top of the Fitch debt interest costs table after its ratio increased dramatically in the past two years from an average of 6.2% between 2017 and 2021. It comes as inflation proves to be harder to tame than in other developed economies.