The Government borrowed more than £25billion last month as inflation left the UK economy in shambles, the Office for National Statistics (ONS) found. Public sector borrowing hit £25.6billion in April 2023, the second-highest of the month since records began in 1993. But recent predictions from the International Monetary Fund (IMF) suggest the Government won’t need to repeat its higher-than-expected borrowing, with recession seemingly no longer on the cards.
The Government’s April borrowing was an increase of more than £4billion on March, when Number 11 greenlit £21.5billion in borrowed funds.
The public sector ultimately spent more than it received in taxes and other income, the ONS found, after inflation reached 8.9 percent the month before.
The organisation added that additional costs incurred by energy support schemes, higher debt interest, and benefit payments exceeded growth in receipts.
Interest rate payments have increased nearly 50 percent on 2022, reaching £9.8billion in 2023 from £3.1billion.
And benefit payments increased with inflation by 10.1 percent.
Some of these aggravating factors will soothe in the coming months according to the IMF, leading experts to conclude that the country can avoid a recession.
The organisation sharply updated its predictions today, changing its forecast from contraction to growth.
The IMF expects the UK will see up to 0.4 percent of growth in 2023, as opposed to the previous expectation of 0.3 percent contraction.
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The organisation said “resilient demand” and falling energy prices would power growth in the UK in the coming months.
IMF managing director Kristalina Georgieva said easing concerns over Brexit and the UK’s stabilising financial environment would help drive the more positive outlook.
Ms Georgieva also praised the Government, saying that ministers took “decisive and responsible steps” to calm the economic strain “in recent months”.
Chancellor Jeremy Hunt said that boosting borrowing was the right thing to do, as the cash helped “protect families and businesses” against the pandemic and energy crisis.
But he conceded that debt and borrowing were too high, and that decreasing the load was a Government priority.
He said: “We’ve taken difficult but necessary decisions to balance the nation’s books, and if we stick to our plan and get our economy growing, then debt is set to fall.”
Mr Hunt also praised the IMF report, stating it “credits our action to restore stability and tame inflation”.
While Ms Georgieva hailed the Government’s efforts, she also handed Mr Hunt a warning.
She said the risks for the UK economy were “considerable”, as “greater-than-anticipated persistence in price- and wage-setting” could keep inflation higher for longer.
The chief added that ministers should not look to cut taxes, as a decision to do so would be neither affordable nor desirable.
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