Inflation-linked debt

According to The Telegraph,

Net borrowing came in at £15.3bn, a highest for the month of August since records began in 1993, the Office for National Statistics said on Tuesday. Analysts had forecast a Public Sector Net Borrowing (PSNB) of £12.51bn.
...
The government's preferred measure on which fiscal forecasts are based, PSNB excluding bank rescues, came in above forecasts at £15.9bn.

The ONS said the deterioration in the public finances was mainly due to higher interest payments on gilts, as a result of the rise in the retail price index.

Interest payments were £3.8bn in August compared with £1.3bn a year ago.

This was offset by a 6.3pc rise in tax receipts were 6.3pc higher than a year early. A £1bn rise in receipts from the 50pc bank bonus to £3.5bn for month has been applied to April borrowing, so is not included in August figures.

This suggests that a large proportion of government debt is indeed inflation-linked, so the Coalition won't be able to inflate their way out of this mess. On balance, that is good news.

Time to get on with the cuts!