Market Loop - Government interest payments soar

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24th June 2022

Bite-sized business news from the UK and beyond

Good morning Five years ago Twitter shook up its proposition by doubling the character count from 140 to 280 and now it's ready for its next shake up. The social media giant announced that it's testing a new feature that allows users to share "notes" as long as 2,500 words. The test will run for two months and involve a small group of writers in Canada, Ghana, the UK and US.

Today's stories

Government interest payments soar
London payment startup raises £500m

ECONOMY
Government interest payments soar

What happened?
Last month the government interest payments on public debt jumped after inflation pushed borrowing costs to some of their highest levels on record.

The rising cost of living isn’t a problem just for households
The government paid £7.6bn in interest costs alone in May - a 70% increase compared to the year before – driven by the rapid rise in inflation. Interest paid on 25% of government debt is linked to the Retail Prices Index measure of inflation, which hit almost 12% in May.

The interest payments were the third-highest ever made by the government, and the highest payment made in May.

Despite the rise in interest, overall government borrowing actually fell by £4bn to £14bn compared to last year when pandemic-related restrictions were still in place.

Looking ahead public finances are set for more debt
The government has been forced to increase spending and borrowing in response to the cost of living crisis. An extra £14bn is being spent on supporting low income households with their bills in the second half of the year.

The government spending watchdog, the OBR, forecasts that debt interest payments will cost the UK £87.2bn over the year to March 2023 as the impact of sky-high inflation filters through the economy.

Other stories to keep you in the loop

British Airways workers at Heathrow vote to strike during school summer holidays
Brits paid billions more in taxes over the last year as HMRC ramped up tax collection
Harrods delays summer discount sale due to global supply chain issues
Nike latest brand to leave Russia permanently
Naked Wines shares tumble on weak outlook warning
US bans Juul e-cigarettes blaming them for youth vaping epidemic

FINTECH
London payment startup raises £500m

What happened?
Yesterday British fintech firm Sumup announced it had raised £507m giving it a valuation of just under £7bn - reportedly less than half the target it had hoped to reach in January.

Founded in 2012, SumUp offers physical card readers and manages payments in online stores. It caters to small businesses and has over 4m customers in 35 countries.

The new funds will be used enter new markets and launch new products.

The funding round comes against a backdrop of falling tech valuations in the public and private markets
Global tech stocks have dropped 25% this year and buy now pay later giant Klarna, and Europe’s most valuable private company, is reportedly trying to raise money at half its peak $46bn valuation.

Investors have been rattled by the prospect of a slowing world economy caused by rising inflation and a cost of living crisis.

Stat of the day

A Russian journalist auctioned off his 2021 Nobel Peace Prize for $103.5m to help victims of the war in Ukraine

Interesting links from around the web

The case for turning off your Zoom camera
Netflix and bills: which streaming services are really worth shelling out for?
12 things you should never buy at Costco, according to a professional chef

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Market Loop - Government interest payments soar

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