Interest payments on government debt hit a record £8.1bn for the month of December because of surging inflation, according to official figures.
The Office for National Statistics (ONS) said the cost of servicing the country’s £2trn+ debt pile was almost 200%, or £5.4bn, up on December 2020.
It is because half a trillion pounds worth of government bonds are linked to the Retail Prices Index (RPI) measure of inflation which stood at 8.4% in December – its highest level since 1991.
In December, the RPI uplift on index-linked gilts was calculated at £5.5bn.
“The recent high levels of debt interest payments are largely a result of movements in the RPI to which index-linked gilts are pegged”, the report said.