Government borrowing rose to £11.6bn in August

Government borrowing was higher than economists had expected in August, new official figures show.

Borrowing - the difference between spending and tax income - rose to £11.6bn last month, according to the Office for National Statistics (ONS).

That was £3.5bn more than a year earlier and the fourth highest August borrowing since monthly records began in 1993.

Experts had predicted public borrowing would stand at £11.1bn last month.

However, it still comes in below the £13bn that had been forecast by the government's finance watchdog, the Office for Budget Responsibility (OBR), back in March.

Governments often borrow to boost the economy. They also borrow to pay for big projects - such as new railways and roads - which they hope will help the economy and create jobs.

There has been speculation that the government could announce new spending pledges in the upcoming Autumn Statement, to address matters such as local councils' finances and safety concerns around school buildings.

Borrowing for the financial year to date has now reached £69.6bn, according to the ONS, which is £19.3bn more than in the same five-month period last year.

However, the total is £11.4bn lower than the amount predicted by the OBR.

Despite this, analysts have questioned how much room Chancellor Jeremy Hunt might have for big spending pledges or tax cuts at the next fiscal event in November.

• How does government borrowing work?

Martin Beck, chief economic adviser to the EY Item Club, said that he did not think the recent "outperformance" of the public finances gave Mr Hunt much room for manoeuvre.

"With the next general election due by the start of 2025, the government may well be hoping that the economic and fiscal backdrop to next spring's Budget proves more amenable to delivering fiscal 'giveaways'"," he said.

Reacting to the latest figures, Mr Hunt said: "These numbers show why after helping families in the pandemic we now need to balance the books.

"That becomes much easier when inflation is under control because higher inflation pushes up interest rates, so we need to stick to the plan to get it down."

A surprise fall in the rate of inflation on Wednesday also called into question whether or not the Bank of England will go ahead with another interest rate rise at its latest meeting.

The latest ONS figures showed that the interest payable on government debt in August was £5.6bn, £3.1bn less than a year before.

About £1.9bn of that was mainly down to a 0.3% increase in the Retail Prices Index measure of inflation between May and June, according to the ONS.

Total net debt had reached £2.59 trillion by the end of August, which was 98.8% of the UK's gross domestic product (GDP) - the value of all the goods and services produced in the UK in a year.