By Jack Barnett
Britain is expected to have borrowed around £5bn last month, largely to pay for household energy support, new figures out from the Office for National Statistics (ONS) this week are poised to show.
The difference between what the government spends and takes in tax revenue – the deficit – is likely to have been kept wide by Chancellor Jeremy Hunt helping families with the cost of living crisis.
Tuesday’s public finance figures will be the final snapshot of the country’s debt burden before the 15 March budget.
Britain’s current debt to GDP ratio is nearly 100 per cent – levels not seen since the 1960’s – pushed higher by a rise in spending to deal with the Covid-19 pandemic and the 2008 financial crisis.
The government has been footing the difference between what suppliers pay for wholesale energy and charge customers to cap families’ bills at £2,500.
A huge unwind in international energy prices, which hit record highs after Russia’s invasion of Ukraine, has put the public finances on a more sustainable footing.
FTSE 100 finished higher again last week
“Borrowing hasn’t been as high as the [Office for Budget Responsibility] had feared, and this pattern is likely to have continued in January given that the sharp fall in energy futures prices should have meant that the cost of subsiding energy bills was much lower than anticipated,” analysts at Oxford Economics said.
“January tends to be the largest month for cash and accrued tax receipts with self-assessment income tax and capital tax due at the end of January (for the preceding financial year),” which should have reduced UK from borrowing nearly £30bn in December, Sanjay Raja, senior economist at Deutsche Bank, said.
City traders will also be eyeing a flurry of results from some of the FTSE 100’s biggest players.
UK bank earnings season ramps up with HSBC updating markets on Tuesday and Britain’s largest mortgage lender Lloyds releasing financials the next day.
An update on HSBC’s hostile relationship with Chinese insurer and largest shareholder Ping An, which has been calling for the bank to break off its profitable Asian arm, will be top of investors’ wish lists.
Mining giant Rio Tinto also posts results on Wednesday.
The FTSE 100 has got off to a roaring start in 2023, with the premier index routinely hitting new record highs. Last week it closed above 8,000 points for the first time ever.
GfK’s long running consumer confidence data out on Friday is expected to be plagued by widespread pessimism about the UK economy and families sweating over their personal finances.
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