Rising debt costs push up UK borrowing in May

LONDON — British government borrowing in May came in higher than expected at just under 14.0 billion pounds, pushed up in part by surging interest debt costs as inflation soared, according to official data published on Thursday.

Economists polled by Reuters had a median forecast of 12.0 billion pounds for borrowing excluding public sector banks.

Borrowing in the April-May period – the first two months of the financial year – was 15% lower than a year earlier at 35.9 billion pounds but was almost 20 billion pounds more than in the April-May period of 2019, before the COVID-19 pandemic hit.

Finance minister Rishi Sunak remains under pressure to borrow more after he added 15 billion pounds last month to his support for households hit by the cost-of-living crisis.

He has warned of the hit to the public finances from rising inflation.

Thursday’s data showed the government’s interest bill rose by 70% from May last year to 7.6 billion pounds, the biggest ever interest cost for the month of May and the third highest for any month.

The Office for National Statistics cut its estimate for borrowing in the 2021/22 financial year, which ended in March, by almost 1.0 billion pounds to 143.7 billion pounds. It also lowered its borrowing estimate for the previous year by almost 8 billion pounds to 309.6 billion pounds. ($1 = 0.8156 pounds) (Reporting by William Schomberg, editing by William James)