Inflation raises cost of UK government borrowing in February; crude oil up again – business live

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UK government borrowing rose more than expected last month, as rising inflation pushed up debt interest payments, handing Rishi Sunak disappointing news the day before he presents his spring statement in the Commons (a kind of mini budget).

The Office for National Statistics said the government’s budget deficit – the gap between spending and income – was £13.1bn in February, the second-highest borrowing figure for that month since records began in 1993. Economists had forecast a shortfall of £8.1bn.

Soaring inflation pushed up interest payments on government debt by more than 50% to £8.2bn, the highest February on record, reports our economics correspondent Richard Partington.

Office for National Statistics (ONS)
(@U.S)

Public sector net borrowing excluding public sector banks was £13.1 billion in Feb 2022.

This was the second-highest Feb borrowing since monthly records began in 1993 – £2.4 billion less than the record set in Feb 2021 https://t.co/4jY1ciKEwo pic.twitter.com/uqQIKV8AS5

March 22, 2022

Over in the US, Federal Reserve chair Jerome Powell wants interest rates to rise faster, saying the Fed must move “expeditiously” to raise rates and possibly “more aggressively” to stop an upward price spiral from becoming entrenched. Goldman Sachs thinks this is a signal that a 50 basis point rate hike is coming, and is forecasting one at the May meeting, and another one in June.

Oil prices are climbing again, with Brent crude up 2.8% to $118.44 a barrel while US light crude is at $114.32 a barrel. EU foreign ministers discussed a potential oil embargo on Russia at a meeting in Brussels yesterday, and hopes of a breakthrough in the ceasefire talks between Ukraine and Russia are receding. However, EU members are split on whether to join the US in adding Russian oil to the sanctions.

Asian shares were lifted by energy and mining stocks, with Japan’s Nikkei closing 1.5% higher while Hong Kong’s Hang Seng gained 2.1% and the Shanghai Composite was little changed. Chinese markets are braced for policy easing, after it was flagged by authorities last week.

The Guardian has launched its new Russian asset trackerin partnership with the Organized Crime and Corruption Reporting Project and other international news organisations. More than $17bn (£13bn) of global assets – including offshore bank accounts, yachts, private jets and luxury properties in London, Tuscany and the French Riviera – have been linked to 35 oligarchs and Russian officials alleged to have close ties to Vladimir Putin. It’s an ongoing project to track the wealth of Russia’s most powerful operators.

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