Public sector borrowing hit £14bn in May

The £14bn figure published by the Office of National Statistics (ONS) as part of its public sector finances review is £3.7bn more than the Office for Budget Responsibility forecast at this point in the year. It was also £4bn less than in May 2021 but £8.5bn more than the pre-Covid period in May 2019.

Central government receipts, meanwhile, were estimated to have been £66.6bn - a £5.7bn increase compared with May 2021. Of these receipts, tax revenue increased by £3.4bn to £48.3bn. 

As for central government bodies, they spend £74bn on current - or day-to-day - expenditure in May 2022, £2.2bn less than in May 2021. 

In contrast to this drop, there have been recent high levels of debt interest payments - largely a result of higher inflation as the interest paid on index-linked gilts rises, with a particular increase in retail prices index (RPI). 

Overall, central government debt interest was £7.6bn in May 2022 - of which the RPI uplift on index-linked gilts contributed £5bn above the accrued coupon payments and other components of debt interest. 

On an accrued basis, this month saw the third-highest debt interest payment made by the central government in any single month and the highest payment made in any May on record.

The ONS also published revisions to net borrowing in the financial year to March 2022, reducing its estimate for public sector borrowing by £900m, a £1.3bn reduction from the previous estimate. 

It’s also revised its estimates for public sector net debt down by £2.5bn from what it predicted previously. This was largely the result of updated estimates of local government debt that are supplied on a quarterly basis.