These numbers show why, after helping families in the pandemic, we now need to balance the books, Chancellor Jeremy Hunt said.
Last month was the fourth highest August borrowing in 20 years, the Office of National Statistics said.
It also reported the budget deficit between April and August to be £69.6 billion, which was £19.3 billion more than a year ago. However, it is far below the £81 billion figure, projected by the UK fiscal watchdog, the OBR.
The government collected £12.6 billion more than predicted by the OBR.
Revenue from taxes brought the central government £57.6 billion, while the income taxes and the VAT both increased by £1.2 billion.
August also usually delivers high accrued receipts because this is when the self-assessed income tax (SA) payments are received after the July deadline.
The SA receipts were £1.5 billion, said the ONS, £0.8 billion less than same month last year.
The cost-of-living crisis in the UK had the government spending more on benefit payments and disability cost-of-living payments, the ONS reported.
In August, net social benefits were £23.5 billion, £2.7 billion more than the same time a year ago.
Operating in the “risky” era for public finances, the government faces borrowing figures at the highest levels since the mid-1940s, fuelled by the energy crisis and the pandemic.
“The coronavirus (COVID-19) pandemic had a substantial impact on the economy as well as public sector borrowing,” said the ONS.
Expressed as a proportion of GDP, borrowing in the financial year ending 2022, fell from 15 percent to 5.3 percent, as the economy recovered from the pandemic. This year, the proportion fell further to 5.1 percent, as the energy crisis kicked in and affected public finances.
No Borrowing Binge
Downing Street’s economic mantra since the start of the year has been to halve the historically high inflation rate by the end of 2023, down to 5 percent.
The chancellor will deliver his autumn statement in November, and with the budget deficit at a better standing than OBR forecasts, the Treasury could announce a big tax cut in spring.
This would be a well-received timing for the Conservative Party, coming ahead of a general election.
Thursday saw the Bank of England maintain the bank rate at 5.25 percent, despite earlier market predictions of a hike up to 5