Good morning.
Government borrowing has exceeded forecasts as surging inflation drives up the costs of servicing debt.
Public borrowing hit £4.9bn in July – much larger than the £0.2bn expected by the fiscal watchdog. That took the total for 2022-2023 so far to £55bn, which is £3bn more than forecasts.
While tax income was higher, the deficit was driven up by debt servicing costs, which surged 81pc from last year.
That’s because a quarter of government debt is tied to the retail price index, which surged to its highest since 1981 last month as rampant inflation shows no signs of slowing.
The figures will add to pressure on Tory leadership contenders Liz Truss and Rishi Sunak, who’ve both vowed to cut taxes despite surging public borrowing.
5 things to start your day
1) How the Bank of England failed to keep pace with inflation – according to its former policymakers Veterans of the Monetary Policy Committee say it is time for a rethink of how it works
2) Interest rates must hit 6pc to tame inflation, says founding Bank of England rate-setter Willem Buiter says policy will need to be “seriously restrictive” to reach 2pc target
3) Discovery offloads GB News stake as channel builds £60m war chest Co-founders and US backer bought out in latest shake-up of broadcaster taking on Sky News and BBC
4) Former Lloyds chairman backs Truss plan for City super-regulator Existing financial watchdogs frequently ‘conflict or pull in different directions’, says Lord Blackwell
5) Peter Thiel’s luxury New Zealand lodge blocked by environmentalists Billionaire’s planning application denied on the grounds the estate would have ‘sufficient adverse visual effects’
What happened overnight
Asian shares were left in limbo this morning while the US dollar made all the running as recession clouds gathered over Europe and highlighted the relative outperformance of the US economy.
Added concerns about the health of China’s economy saw MSCI’s broadest index of Asia-Pacific shares outside Japan ease 0.3pc, to be down 1.1pc on the week.
Chinese blue chips were flat, while South Korea lost 0.5pc. Japan’s Nikkei fared better with a 0.3pc gain due in part to a renewed slide in the yen.
Coming up today
- Corporate: Apax Global Alpha (interims)
- Economics: GfK consumer confidence, public finances, retail sales (UK), inflation (Japan), producer prices (Germany)
