The UK is set to borrow more than originally anticipated but is enjoying lower than expected debt interest payments, according to the chancellor.
George Osborne used his autumn statement to tell MPs that “debt is not coming down as quickly as we’d hoped” but asserts that the government will meet its deficit reduction targets.
Borrowing will be £112 billion higher than expected over the next four years, the chancellor said, but the UK’s debt interest payments will be £22 billion less than predicted by 2015 due to falling gilt yields.
“We are the only major western country that has had its credit rating improved [in the last 18 months] … Yesterday, we were even borrowing money more cheaply than Germany,” he told parliament.
Osborne cited estimates from the Office for Budget Responsibility, which predict that the UK’s debt-to-GDP will 78% during 2014-15 before easing back.
In addition, total debt is forecast to drop to £137 billion in 2011, which is £10 billion above earlier estimates. In 2012, it will fall to £120 billion and gradually move down to £24 billion in 2016-17.
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