LONDON (AP) 鈥� British government debt rose to the highest level in almost 60 years last month and retail sales slumped, underscoring the scale of the economic challenges facing after her administration .
Public borrowing rose to 98% of economic output in September as rampant inflation increased interest payments on what the government owed, the Office for National Statistics said Friday. That鈥檚 higher than at any point since 1963, when Britain was still paying off debts accumulated during World War II.
Deepening the sense of gloom were figures showing that retail sales fell for a second straight month and are now 1.3% below pre-pandemic levels.
鈥淭oday鈥檚 weaker-than-expected public borrowing figures 鈥� are a reminder that amidst the current political turmoil, the tough task facing the government of demonstrating its fiscal credibility lie immediately ahead, rather than behind,鈥� said James Smith, research director at the Resolution Foundation, a think tank focused on improving living standards for low- and middle-income people.
Britain has begun the process of in less than four months after Thursday following .
The new leader鈥檚 first task will be to after Truss鈥� decision to announce without saying how she would pay for them fueled concerns about spiraling government debt that unnerved investors and voters and forced .
Treasury chief Jeremy Hunt, who took office last week, has and pledged that debt will begin falling as a percentage of gross domestic product within the next few years. That has steadied financial markets after Truss鈥� plans , threatened the solvency of some pension funds and pushed borrowing costs higher for the government and millions of homeowners.
But people are watching closely to see how Hunt and his new boss 鈥� whoever it may be 鈥� achieve those goals at a time when the .
The government has already promised to spend 60 billion pounds to and , and demands are growing to boost welfare benefits and public pensions with inflation running at a . The National Health Service, schools and public transportation providers also are seeking more money to cover soaring costs.
, with sales of food, motor fuels, furniture and other non-food items all falling in September, the Office for National Statistics said. The overall decline was driven by a 1.8% drop in grocery store sales.
鈥淚n recent months, supermarkets have highlighted that they are seeing a decline in volumes sold because of increased food prices and cost of living impacts,鈥� the ONS reported.
The also is squeezing government finances by increasing the cost of servicing the nation鈥檚 debts.
Interest payable on the government鈥檚 debt rose to 7.7 billion pounds in September, or about 2.5 billion pounds more than during the same month last year, the ONS said. That was due primarily to rising payments on inflation-linked bonds, which are pegged to the retail prices index.
Retail price inflation accelerated to 12.6% in September from 4.9% a year earlier, ONS figures show. The retail prices index tends to be higher than the consumer prices index because of differences in the way the two numbers are calculated.
All of this comes against the backdrop of , which has and energy and fueled demands for an increase in defense spending.
Government borrowing increased to 20 billion pounds in September, 2.2 billion pounds more than in September 2021 and 5.2 billion pounds more than forecast in March by the independent Office for Budget Responsibility, the ONS said.
Hunt said this week that the government would have to raise taxes and reduce spending to restore faith in the public finances, but he refused to say what programs would be affected until he delivers his new economic plan to Parliament on Oct. 31. The plan will be accompanied by analysis from the Office for Budget Responsibility showing how it is likely to affect public borrowing.
鈥淭hat means decisions of eye-watering difficulty,鈥� Hunt told the House of Commons after taking over. 鈥淏ut I give the House and the public this assurance: every single one of those decisions, whether reductions in spending or increases in tax, will prioritize the needs of the most vulnerable.鈥�
Danica Kirka, The Associated Press
