London Daily

Focus on the big picture.
Thursday, Jul 24, 2025

Pound falls to 37-year low as cost of servicing government debt hits August record

Pound falls to 37-year low as cost of servicing government debt hits August record

The chancellor responds to the latest borrowing figures by insisting it is "absolutely right" that the government takes action to help families and businesses bear down the cost of living crisis.

The pound has fallen to a 37-year low against the dollar after figures showed that the cost of servicing UK government debt last month hit a record high for August - before Liz Truss came to power with promises to splash the cash.

The Office for National Statistics said that interest payments were £8.2bn last month. That was £1.5bn more than a year earlier and the highest August figure since monthly records began in 1997 as it included the effect of rising inflation.

Many government bonds are linked to the Retail Prices Index measure, which was 12.3% that month.

The payments meant that public sector borrowing was £11.82bn, far more than the £8.5bn forecast by economists.

There is concern that taxpayer-funded energy aid for households and businesses, coupled with the promise of tax cuts to spur growth, is damaging investor confidence.

A Reuters poll of bond strategists and economists, carried out last week, suggested that 55% believed there was a high risk that confidence in British assets, including government bonds, would deteriorate sharply in the next three months.

The pound has lost 7% of its value against the dollar in the past three months. Sterling was trading at its lowest level against the dollar since 1985 early on Tuesday at $1.1349.

Most of the decline this year can be explained by the global rush towards the dollar in times of uncertainty, but Ms Truss's plan to subsidise energy bills is tipped to come in at about £150bn.

Bas Van Geffen, a strategist at Rabobank, said: "Trust is fleeting... and Truss would be wise to reassure markets that she has a plan to pay for these expenditures."

Kwasi Kwarteng, the chancellor, who is expected to outline a mini-budget called "The Growth Plan" on Friday, has insisted that Britain has more room to borrow than other countries as they have a bigger share of public debt to economic output.

The government believes that kick-starting growth is the best way to get stronger tax revenues.

Mr Kwarteng said in reaction to the public borrowing figures: "Our priority is to grow the economy and improve living standards for everyone - with strong economic growth and sustainable public finances going hand in hand.

"As chancellor, I have pledged to get debt down in the medium term. However, in the face of a major economic shock, it is absolutely right that the government takes action now to help families and businesses, just as we did during the pandemic."

Newsletter

Related Articles

0:00
0:00
Close
Politic is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
Thai Civilian Death Toll Rises to 12 in Cambodian Cross-Border Attacks
TSUNAMI: Trump Just Crossed the Rubicon—And There’s No Turning Back
Over 120 Criminal Cases Dismissed in Boston Amid Public Defender Shortage
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
Trump Announces $550 Billion Japanese Investment and New Trade Agreements with Indonesia and the Philippines
US Treasury Secretary Calls for Institutional Review of Federal Reserve Amid AI‑Driven Growth Expectations
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Severe Flooding in South Korea Claims Lives Amid Ongoing Rescue Operations
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
CEO Resigns Amid Controversy Over Relationship with HR Executive
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
Epstein Files Deepen Republican Party Divide
Zuckerberg Faces $8 Billion Privacy Lawsuit From Meta Shareholders
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
SpaceX Nears $400 Billion Valuation With New Share Sale
Microsoft, US Lab to Use AI for Faster Nuclear Plant Licensing
Trump Walks Back Talk of Firing Fed Chair Jerome Powell
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Irish Tech Worker Detained 100 days by US Authorities for Overstaying Visa
Dimon Warns on Fed Independence as Trump Administration Eyes Powell’s Succession
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Jeff Bezos Considers Purchasing Condé Nast as a Wedding Gift
Ghislaine Maxwell Says She’s Ready to Testify Before Congress on Epstein’s Criminal Empire
Bal des Pompiers: A Celebration of Community and Firefighter Culture in France
FBI Chief Kash Patel Denies Resignation Speculations Amid Epstein List Controversy
Air India Pilot’s Mental Health Records Under Scrutiny
Google Secures Windsurf AI Coding Team in $2.4 Billion Licence Deal
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
×