I didn’t give a lot consideration yesterday to the claimed fall in public sector borrowing in December 2023.

I did so in a single day and located the rationale on this chart:

The info does, in fact, come from the Workplace for Nationwide Statistics.

What the chart reveals is that in December 2023, there was no curiosity apparently payable on index-linked bonds (the precise determine was damaging £0.1 billion). Because the OBR themselves mentioned:

In December 2023, the curiosity payable on central authorities debt was £4.0 billion, £14.1 billion lower than in December 2022. This was the bottom December curiosity payable since 2020 and £5.5 billion lower than the £9.5 billion forecast by the OBR.

In different phrases, there was one thing actually moderately bizarre concerning the December 2023 curiosity cost on condition that there was supposedly nonetheless headline inflation ongoing throughout the month that ought to have resulted in an curiosity legal responsibility accruing for the month with a consequent improve in authorities debt ensuing.

So, what did occur? Did the ONS right earlier errors?

Or have the ONS discover, as I’ve, that inflation is successfully over and that no additional provision was required?

The explanation given was this:

The big month-on-month will increase within the Retail Costs Index (RPI) noticed since early 2021 led to substantial will increase in debt curiosity payable, with the biggest three months on report occurring in 2022 and 2023. The extra curiosity brought on by RPI inflation is described as capital uplift and impacts the worth of the gilt principal.

Capital uplift in December 2023 was damaging £0.1 billion reflecting the 0.2% lower within the RPI between September and October 2023. This lowered the capital uplift on the three-month lagged index-linked gilts, which make up round three-quarters of the index-linked gilt inventory. A month-to-month time collection of the overall capital uplift on the index-linked gilts in difficulty is accessible as collection identifier code MW7L.

In different phrases, the ONS suppose inflation is absolutely going away and reacted to that. They’ve confirmed my very own considering on this difficulty.

However what was not true was that borrowing fell consequently. They only modified an accounting entry, which was the entry for curiosity that is perhaps paid on index-linked binds perhaps fifteen years therefore, which is how the accounting for this supposed cost is made.

And on the premise of that guesstimate, Jeremy Hunt supposedly has cash to present away in tax cuts within the finances.

That’s how crass financial administration within the UK is.