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In our Market Monday insights, Prosperity Investment Management examines the latest developments across the globe's biggest financial markets - providing you with all the latest information you need to know.
Surging inflation led interest payments on government debt to hit the highest amount for May on record.
Interest payments paid by the government for the month of May hit £7.6bn, up by just over £3.1bn from the year before.
Government borrowing fell in May from the year before, but still remained higher than pre-Covid levels.
Borrowing - the difference between spending and tax income - was £14bn, down £4bn from a year earlier, the Office for National Statistics stated.
But the figure was still the third-highest May borrowing since monthly records began in 1993 and was also £3.7bn more than the Office for Budget Responsibility (OBR) had predicted.
The recent high levels of debt interest payments are largely a result of higher inflation, the ONS said. This rise is due to the interest paid on government bonds rising in line with the Retail Prices Index measure of inflation, which hit almost 12% in May 2022.
The ONS said May's figure was the third highest debt interest payment made by a government in any single month.
The OBR estimates that debt interest payments will cost the government £87.2bn over the financial year ending in March 2023.
So far this financial year, interest payments have totalled £14.1bn, up £4.7bn year on 2021.
Central government receipts were £66.6bn in May 2022, £5.7bn more than May 2021, with an annual increase of £3.4bn in taxes. Tax revenues in total rose to £48.3bn in May, with National Insurance Contributions (NICs) raising £2bn more than last year.
Employees, employers and the self-employed started paying 1.25p more in the pound for National Insurance from 6 April 2022.
