Fresh blow for Philip Hammond as UK deficit up by half a billion pounds
2 min read
The public spending deficit made a surprise jump last month in a fresh blow to Philip Hammond as he puts the finishing touches on his set piece Budget.
It stood at £8bn in October - up 6.9% compared with the same month the year before when it was £7.56bn, according to the Office for National Statistics.
The news leaves the Chancellor with less room for manoeuvre as he prepares to lay out his spending plans tomorrow.
Mr Hammond has faced calls from some quarters to end austerity and invest more in housing, health and infrastructure.
But others want him to stick to his fiscal rules and continue to pay down the deficit - especially as Brexit looms.
The ONS blamed the rise in the deficit on the higher price of repaying existing government debt - due to higher inflation after the pound fell in the wake of the Brexit vote.
The stats office explained: “In October 2017, the debt interest paid by central government was £6bn. While this represents the highest October interest payment on record it remains less than the highest recorded monthly payment of £7.2bn in April 2017.
“This increase in debt interest payment is largely due to the movements in the level of the Retail Prices Index.”
The grand total of public debt stood at £1.79tn at the end of October this year - an increase of £148bn on the year before and equivalent to 87.2% of GDP.
Shadow Chancellor John McDonnell said the figures showed that a “change of course” was needed in tomorrow’s Budget.
“These figures are a reminder of the continued failure of both Philip Hammond and Theresa May over these past seven years," he added.
“The deficit has still not been eliminated as they promised it would be by 2015, and the national debt continues to grow.
“The rise in the Government's deficit over October shows once again that seven years of Tory spending cuts have caused pain and misery for millions with little to show for it.”
Mr Hammond had already got off to a bad start this week after he told the BBC on Sunday there were "no unemployed people" in the UK.
Labour MP Chris Leslie - who supports the pro-EU Open Britain campaign - said Brexit was "damaging the public finances".
He added: “The Chancellor is running out of headroom.
"Nobody voted to be worse off, or for a weaker economy, and as these new facts emerge people are entitled to keep an open mind about whether this is the right course for our country.”
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