Public Sector Finances UK - May 2024 - Borrowing Up - Debt Up

21st June 2024

Borrowing - the difference between public sector spending and income - was £15.0 billion in May 2024, £0.8 billion more than in May 2023 and the third highest May borrowing since monthly records began in 1993.

Borrowing in the financial year-to-May 2024 was £33.5 billion, £0.4 billion more than in the same two-month period a year earlier and the fourth highest year-to-May borrowing since monthly records began.

Public sector net debt excluding public sector banks was provisionally estimated at 99.8% of gross domestic product (GDP) at the end of May 2024; this was 3.7 percentage points more than at the end of May 2023, and remains at levels last seen in the early 1960s.

Excluding the Bank of England, debt was 91.3% of GDP, 5.3 percentage points more than at the end of May 2023 but 8.5 percentage points lower than the wider debt measure.

Public sector net worth excluding public sector banks was in deficit by £725.7 billion at the end of May 2024, a £95.2 billion larger deficit than at the end of May 2023.

Central government net cash requirement (excluding UK Asset Resolution Ltd and Network Rail) was £24.6 billion in May 2024, £7.6 billion more than in May 2023.

Borrowing in May 2024
The public sector spent more than it received in taxes and other income in May 2024, requiring it to borrow £15.0 billion.

Though both public sector income and spending increased year-on-year, the increase in spending exceeded that of income.

Initial estimates for May 2024 suggest that borrowing was £0.8 billion (or 6.0 %) higher than May last year but £0.6 billion (or 4.2 %) lower than forecast by the Office for Budget Responsibility.

Borrowing in May 2024 was the third highest May borrowing since monthly records began in 1993, behind those of the coronavirus (COVID-19) pandemic in 2020 and 2021.

entral 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 an important determinant of public sector borrowing. In May 2024, central government borrowed £14.9 billion, £1.8 billion more than in May 2023.

Central government receipts
Central government's receipts were £76.8 billion in May 2024, £1.0 billion more than in May 2023. Of this £1.0 billion increase in revenue:

central government tax receipts increased by £2.0 billion to £58.6 billion, with increases in Income Tax, Corporation Tax and Value Added Tax (VAT) receipts of £0.6 billion, £0.4 billion and £0.3 billion, respectively

compulsory social contributions decreased by £0.9 billion to £13.1 billion, largely because of the reductions in the main rates of National Insurance in 2024

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

Central government expenditure
Central government spending data for May 2024 are provisional. There is uncertainty around these estimates until more detailed departmental information becomes available later in the year.

Central government’s total expenditure was £91.6 billion in May 2024, £2.8 billion more than in May 2023. Of this £2.8 billion increase in spending:

net social benefits paid by central government increased by £2.2 billion to £25.1 billion, largely because of inflation-linked benefits uprating

central government departmental spending on goods and services increased by £0.7 billion to £35.2 billion, as inflation increased running costs

payments to support the day-to-day running of local government increased by £0.7 billion to £11.5 billion; however, being both central government spending and a local government receipt, these intra-government transfers have no impact on overall public sector borrowing

subsidies paid by central government decreased by £1.1 billion to £2.4 billion, largely because of the closure of the energy support schemes that remained active until June 2023

interest payable on central government debt increased by £0.2 billion to £8.0 billion, largely because the interest payable on index-linked gilts rises and falls with the Retail Prices Index

Interest payable on central government debt
In May 2024, the interest payable on central government debt was £8.0 billion. This was the second highest May payable since monthly records began (for this component) in 1997, behind that of May 2022.

The large month-on-month increases in the Retail Prices Index (RPI) since early 2021 led to increases in debt interest payable, with the largest three months on record occurring in 2022 and 2023. The additional interest caused by RPI inflation is described as "capital uplift" and affects the value of the gilt principal.

Capital uplift was £3.1 billion in May 2024, reflecting the 0.5% increase in the RPI between February and March 2024. This increased the capital uplift on the three-month lagged index-linked gilts (as shown on the UK Debt Management Office website), which make up around three-quarters of the index-linked gilt stock.

A monthly time series of capital uplift on the index-linked gilts in issue is available as series identifier code JNYY. This series is illustrated as the blue portion of each bar in Figure 2 and excludes the uplift payable at the time of an index-linked gilt redemption. These redemption payments are already recorded as accrued interest payable across the life of each index gilt.

Read the full ONS report HERE