How much did energy bill subsidies for households and firms add to borrowing?

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Energy Subsidies Contributed Nearly £7 Billion to UK Borrowing

Energy support schemes implemented by Prime Minister Rishi Sunak for both businesses and individuals increased government borrowing by approximately £7 billion. This measure was part of broader efforts to shield the public from elevated energy costs, a situation exacerbated by Russia's invasion of Ukraine. The overall public sector net borrowing in December reached £27.4 billion, a significant rise from the previous year, with these energy subsidies forming a substantial component of this increase.
Impact on December Borrowing Figures

The £27.4 billion public sector net borrowing recorded in December marked the highest figure for that month since records began in 1993. This amount exceeded market expectations, which had forecast borrowing to reach £17 billion. The increase from the previous year was £16.7 billion, highlighting the substantial fiscal impact of the prevailing economic conditions and government interventions.
Rising Interest Payments

In addition to the costs associated with energy subsidies, interest payments on government debt also saw a dramatic escalation. These payments reached £17.3 billion in December, representing the second-highest monthly total on record. This surge in interest costs is partly attributed to the Bank of England's aggressive interest rate hikes, aimed at curbing inflation but consequently increasing the expense of state borrowing.
Broader Economic Context

The UK's economic landscape in December was characterised by persistent high inflation, which had slowed to 10.5 per cent but remained near historically elevated levels. This ongoing cost-of-living crisis has fuelled widespread industrial action across both public and private sectors. Government assessments suggest the economy may have already entered a recession, a prospect further underscored by a recent survey indicating the most significant drop in UK private sector business activity in two years.

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How much did energy bill subsidies for households and firms add to borrowing?

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