Liz Truss' stint in Downing Street was record-breaking but it leaves deep scars for the UK economy.

Record interest on the debt, falling retail sales, confidence at half mast: the British economy is accumulating new negative signals in a country in the midst of a political and financial crisis.

Interest on Britain's debt reached 7.7 billion pounds in September, 2.5 billion more than a year earlier and the highest amount paid since these monthly statistics began in 1997.

Since mid-2021, the State's debt burden "has increased considerably, not because of the increase in debt", but "largely because of inflation", commented the National Office of statistics (ONS) on Friday in its monthly report.

Government-sponsored non-bank government borrowing rose 2.2% year on year to £200bn in September, the highest on record since these statistics began thirty years ago – except for the record observed during the Covid-19 pandemic.

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Public debt reached for its part – excluding public banks – 2,450.2 billion pounds at the end of September, representing 98% of GDP and 2.5 percentage points of GDP more than a year earlier.

"To stabilize the markets, I made it clear that difficult decisions were going to be taken in order to protect" the accounts of the State, warned Jeremy Hunt, the Chancellor of the Exchequer.

Urgently appointed a week ago in the face of the market debacle caused by his predecessor's "mini-budget" at the finance ministry, Jeremy Hunt immediately canceled almost all of these expensive and unfunded budget measures to devastating effect.

He must present a medium-term plan on October 31.

This proposal, which should include cuts in public spending and a possible tax hike, in total opposition to the campaign promises of the ephemeral Prime Minister Liz Truss, who was forced to resign in the face of the sinking of her government.

In particular, pressure is mounting to impose a higher tax on the profits of energy companies.

The British press evokes a possible taxation of the banks, which profit from the blaze of the interest rates.

Fall in sales 

Jeremy Hunt's plan is uncertain, however, with the new chancellor unsure whether he will remain in office in the next government.

Faced with a political slump, the country is also going through an economic storm with flat activity, inflation at more than 10% – the highest in the G7 – an energy crisis and millions of Britons falling into poverty.

These difficulties are felt in consumption: retail sales, which have been declining for months, fell 1.4% in September compared to August.

The National Statistics Office explains this decline not only by the rise in the cost of living, but also by the impact of the national day off declared on the day of the funeral of Queen Elizabeth II last month, with the closure of many shops.

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The GfK confidence index also reflects the sluggish mood of consumers.

After jumping on Thursday at the announcement of the resignation of Liz Truss, the pound fell on Friday: it lost 0.33% to 1.1196 dollars, around 7:45 a.m. GMT.

Its historically depreciated level illustrates investor mistrust, as does, conversely, the rebound in long-term debt yields on the market.

The cost of 30-year government debt rose to 4.022% around 7:45 GMT, crossing the 4% threshold.

At the end of 2021, it was worth just over 1%.

The "mini-budget" had pushed it to more than 5%, weakening asset funds held by pension funds and the Bank of England had intervened to prevent a financial crisis.

“Political turmoil and the fiscal about-face have eroded the country's credibility among international investors, observes Richard Hunter, analyst at Interactive Investor.

Completing this gloomy picture, the figures published on Friday bear witness to the scale of the task awaiting the future government.

With AFP

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