“The latest inflation-fuelled numbers will provide little comfort for the new Prime Minister, as at £55bn for the quarter to June, the deficit is more than double what it was before the pandemic.
“With inflation at a 40-year high and record energy prices this winter, the question facing the next Prime Minister and Chancellor will not be about whether or not to write another cheque to struggling families, but how big it will be.
“Meanwhile, rising supplier cost inflation and public sector pay demands that are unlikely to be satisfied by a proposed 5% increase will put severe pressure on both operating and capital budgets. Combined with long-term demographic trends that continue to drive public spending higher, the likelihood is that any tax cuts committed to during the Conservative party leadership campaign will end up being reversed in the years ahead.”
Notes to editors:
The public sector finance numbers are available here.