The United Kingdom is predicted to incur the greatest debt interest payments among developed nations this year, as escalating prices drive up the cost of its inflation-pegged debt.
Forecasts from the credit rating agency, Fitch, suggest that the Treasury will devote £110 billion to servicing debt interest in 2023, accounting for about 10.4% of the total governmental revenue.
This proportion surpasses that of all other high-income nations, situating the UK at the top of the list for the first time since record-keeping started in 1995.
Roughly a quarter of the UK’s government debt consists of index-linked bonds, whose payments vary corresponding to inflation rates.
The UK stands as an exception in this regard. Italy, with the second-largest portion, holds 12%, while most nations hold less than 10%.
Fitch’s Global Head of Research for Sovereigns and supranational, Ed Parker, commented, “There’s been a substantial inflationary shock which is negatively impacting public finances and is undoubtedly a crucial factor influencing the sovereign credit rating.”
