Central government debt interest reached £10.9bn in September, according to Office for National Statistics figures reported by City AM. That is about 17% more than a year earlier and roughly £2bn above the Office for Budget Responsibility's forecast.
City AM also cites Resolution Foundation analysis showing receipts 9% higher than in the same month a year earlier, driven by corporation tax and running above OBR forecasts. On that basis City AM says the fiscal problem lies in spending and debt costs rather than tax take.
The OBR forecasts debt interest just shy of £110bn this year, rising to nearly £135bn in 2030. By its own estimate, each sustained one percentage point rise in gilt yields adds about £8.4bn by 2030. A one point rise in inflation and in short-term rate expectations on top of that could take the hit to headroom to £23.8bn.
The Institute for Fiscal Studies said on 2 October that 10-year yields had risen from 4.4% before the Spring Forecast to 5.4%, and 30-year yields from about 5.2% to 5.9%. The 10-year rise is a full percentage point. The IFS says UK rises are in line with or slightly smaller than those in other major economies.