UK Borrowing Rose in Fiscal First Quarter

U.K. government borrowing increased on the year in the three months through June, official figures showed Friday, as quickening inflation pushed up the cost of servicing Britain's debt.

Payments to the European Union also rose. Ending payments to the EU was a key goal of pro-Brexit campaigners in last year's referendum on membership.

Public-sector borrowing to cover the shortfall between taxes and spending was GBP22.8 billion ($29.59 billion) in the first three months of the fiscal year, the Office for National Statistics said, compared with GBP21 billion in the same period a year earlier.

The rise in borrowing was driven by 5.6% increase in government spending, which outpaced growth in tax receipts. Britain's contribution to EU coffers in the three months through June was GBP3.2 billion, almost twice the GBP1.8 billion paid during the same period a year earlier. The increase reflected past economic growth, the ONS said, while a rise in inflation earlier this year pushed up the cost of servicing Britain's inflation-linked debt. Tax income rose 4.7%.

The increase in borrowing comes as Treasury chief Philip Hammond faces renewed pressure--including from some quarters of his own party--to ease a squeeze on public spending that has been a centerpiece of goverment economic strategy for years.

The Chancellor of the Exchequer is set to present fresh tax and spending plans to Parliament in the fall.

Write to Jason Douglas at jason.douglas@wsj.com and Wiktor Szary at wiktor.szary@wsj.com

(END) Dow Jones Newswires

July 21, 2017 04:56 ET (08:56 GMT)