Government borrowing highest in August since Covid

Government borrowing rose in August to its highest monthly level since the Covid pandemic in 2021.

Official figures show borrowing – the difference between spending and tax revenue – hit £13.7 billion last month, up £3.3 billion on August last year.

According to the Office for National Statistics (ONS), tax revenues rose “strongly”, but this was offset by increases in some benefits and higher spending on public services, including salaries.

The figures come as the government prepares for its late October budget, which Prime Minister Sir Keir Starmer has warned will be “painful”.

The ONS said higher spending on benefits was largely due to payments being increased in line with inflation. A number of benefits rose, including carer’s allowance and disability allowance.

Inflation also pushed up the cost of public services, the report said.

The increased borrowing in August left the national debt at levels seen in the early 1960s. The ONS estimates that the debt is equivalent to the size of the entire British economy.