Jeremy Hunt vows to do ‘whatever necessary’ to bring down debt as borrowing jumps – business live | Business

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We’ve woken up to news of a further rise in UK government borrowing, a sharp drop in retail sales in Great Britain, and a decline in the pound.

Sterling slid 0.5% to $1.1178 this morning, taking it close to a one-week low, and wiping out the brief rally to $1.1338 after Liz Truss resigned as prime minister on Thursday.

The UK’s public finances have worsened further, with the government borrowing £20bn in September as it spent more on debt interest payments, according to figures released by the Office for National Statistics this morning. It is the second highest September borrowing on record and worse than what City economists had expected – putting more pressure on Jeremy Hunt, the chancellor, ahead of the fiscal statement on 31 October.

Hinting at potential spending cuts and tax rises, Hunt said:

Strong public finances are the foundation of a strong economy. To stabilise markets, I’ve been clear that protecting our public finances means difficult decisions lie ahead.

We will do whatever is necessary to get drive down debt in the medium term and to ensure that taxpayers’ money is well spent, putting the public finances on a sustainable path as we grow the economy.

The government borrowed £2.2bn more last month than in September 2021, making it the second-highest September borrowing since monthly records began in 1983.

Central government day-to-day spending was £79.3bn last month, up £5.8bn on a year earlier. This was mostly because of a £2.5bn increase in debt interest payments, while a £4.4bn increase in social benefit payments was partly offset by subsidy payments.

Debt interest payable rose to £7.7bn, the highest September figure since monthly records began in April 1997, because of the effect on soaring inflation on index-linked gilts.

At the same time, retail sales in Great Britain fell sharply last month, as the cost of living crisis is hitting people’s ability to spend on food and other items.

Volumes fell by 1.4% in September, a bigger-than-expected drop that took them 1.3% below pre-coronavirus levels in February 2020, according to the ONS. Food store sales fell 1.8%, online sales retreated 3% and petrol was down 1.3%.

It said that while retailers continue to mention the effect of rising prices and the cost of living on sales volumes, data for September are also affected by the bank holiday for the Queen Elizabeth II’s state funeral, when many shops closed.

Within non-food stores, sales of household goods such a furniture fell 1.5% while department stores recorded a 0.6% drop. Clothing shops eked out a 0.1% gain, mainly because of growth in shoe shops.

In the three months to September, retail sales were down 2% compared with the previous three months; this continues the downward trend seen since the summer of 2021.

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