Inflation to add £26bn to UK debt costs
Government auditors are getting increasingly anxious about the country’s finances, and more specifically how leaving the European Union will affect it. The National Audit Office (NAO) recently released a report warning Chancellor of Exchequer, Philip Hammond, that if a deal is not soon made with the European Union, it could significantly jeopardize the UK finances.
In a report released today, the NAO has warned that if inflation increases by just one per cent it could add twenty-six billion pounds to the country’s already impossible debt between 2016 and 2021.
Sir Amyas Morse, head of the National Audit Office (NAO), further warned of the consequences of so many consumers borrowing on credit, adding that borrowing has already increased by sixty per cent since 2009-10.
Interest payments on the UK’s debts has already cost the government £222 billion and NAO warns that along with “unexpected developments”, such as Brexit, this could pose”significant risks” to the UK’s finances.
Considering the prolonged uncertainty following our exit from the EU, NAO recommended the government treasury keep any risks under “constant review”, and and be ready to react quickly and flexibly.
The report is one of several from the NAO which will explore the major risks to public finances.
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