Public Sector Finances, UK - December 2023

24th January 2024

Public sector net borrowing excluding public sector banks (borrowing) in December 2023 was £7.8 billion, around half or £8.4 billion less than that borrowed in December 2022 and the lowest December borrowing since 2019.

Central government debt interest payable was £4.0 billion in December 2023, £14.1 billion less than in December 2022 and the lowest December figure since 2020; changes in interest payable are largely the effect of Retail Prices Index (RPI) movements on index-linked gilts.

Borrowing in the financial year-to-December 2023 was £119.1 billion, £11.1 billion more than in the same nine-month period the previous year and the fourth-highest financial year-to-December borrowing on record.

Public sector net debt excluding public sector banks (debt) was £2,685.6 billion at the end of December 2023 and was provisionally estimated at around 97.7% of the UK's annual gross domestic product (GDP); this is 1.9 percentage points higher than in December 2022 and remains at levels last seen in the early 1960s.

Excluding the Bank of England, debt was £2,437.9 billion, or around 88.7% of GDP, £247.7 billion (or 9.0 percentage points) lower than the wider measure.

Public sector net worth excluding public sector banks was in deficit by £715.4 billion at the end of December 2023; this compares with a £593.7 billion deficit at the end of December 2022.

Central government net cash requirement (excluding UK Asset Resolution Ltd and Network Rail) was £18.7 billion in December 2023, £4.5 billion less than in December 2022.

Borrowing in December 2023
The public sector spent more than it received in taxes and other income in December 2023, requiring it to borrow £7.8 billion. This was £8.4 billion less than was borrowed in December 2022 and the lowest December borrowing since 2019.

Central government borrowing
Central government forms the largest part of the public sector and includes HM Revenue and Customs, the Department of Health and Social Care, the Department for Education and the Ministry of Defence.

The relationship between central government's receipts and expenditure is the main determinant of public sector borrowing. Central government borrowed £4.6 billion in December 2023, £10.1 billion less than in December 2022 and £6.7 billion less than the £11.3 billion forecast by the Office for Budget Responsibility (OBR).

Central government receipts
Central government's receipts were £81.5 billion in December 2023, £4.8 billion more than in December 2022 but £1.8 billion less than the £83.3 billion forecast by the OBR. Of this £81.5 billion, tax receipts were £61.1 billion, £3.5 billion more than in December 2022, with Income Tax receipts and Value Added Tax (VAT) receipts increasing by £1.3 billion and £1.2 billion, respectively.

A detailed breakdown of central government income is presented in our Public sector current receipts: Appendix D dataset.

Central government expenditure
Central government's total expenditure was £86.1 billion in December 2023, £5.4 billion less than in December 2022 and £8.4 billion less than the £94.5 billion forecast by the OBR.

Net investment
Central government's net investment was £5.4 billion in December 2023, £10.5 billion more than the negative £5.1 billion recorded in December 2022.

In February 2022, the UK government announced changes to interest rates and repayment terms for student loans in England. As a result of these changes, the central government's student loans book (or the money lent by government to students to fund their studies and living costs) was revalued and increased by £10.0 billion. That is, the amount expected to be repaid to government increased by £10.0 billion and therefore the amount not expected to be repaid, the amount recorded as paid by government, decreased by £10.0 billion.

In December 2022, when these regulations took effect, this revaluation was recorded as a £10.0 billion capital transfer from households to central government and so reduced net investment by a corresponding amount. There was no similar transaction in December 2023.

Net social benefits
Net social benefits paid by central government were £23.7 billion in December 2023, £2.7 billion more than in December 2022. In recent months we have seen large increases in benefit payments largely because of inflation-linked benefits uprating and cost-of-living payments. For more information on these benefit payments, see UK Parliament's Benefit uprating 2023 to 2024 report and GOV.UK's Cost of Living Payments 2023 to 2024 guidance.

Energy support schemes
Subsidies paid by central government were £2.4 billion in December 2023, £4.2 billion less than in December 2022. This is largely because of the cost of the Energy Price Guarantee (for households) and the Energy Bill Relief Scheme (for businesses), which affected this month the previous year.

Payments recorded under central government "other current grants" were £2.0 billion in December 2023, £1.7 billion less than in December 2022. This decrease was largely because of the cost of the previous year's Energy Bills Support Scheme when six monthly relief payments were made directly to households between October 2022 and March 2023.

Spending on goods and services
Central government departmental spending on goods and services was £33.7 billion in December 2023, £2.3 billion more than in December 2022, as inflation increased running costs. Of this, staff costs increased by £1.2 billion, and spending on the procurement of goods and services increased by £1.0 billion.

Interest payable on central government debt
In December 2023, the interest payable on central government debt was £4.0 billion, £14.1 billion less than in December 2022. This was the lowest December interest payable since 2020 and £5.5 billion less than the £9.5 billion forecast by the OBR.

Read the full report at
https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicsectorfinance/bulletins/publicsectorfinances/december2023