UK government borrowing significantly exceeded expectations in February, according to official data, intensifying the pressure on chancellor Rachel Reeves as she prepares for her spring statement next week.
In February, the government borrowed £10.7bn, marking the fourth-highest February figure since records began in 1993, according to the Office for National Statistics (ONS). This was well above the City’s forecast, which had anticipated borrowing of around £7bn.
For the financial year to February, borrowing totalled £132.2bn, a rise of £14.7bn compared to the same period in the previous year. In October, the Office for Budget Responsibility (OBR) had projected that public sector borrowing would reach £127.5bn for the entire financial year, which ends in March. An updated OBR forecast is expected to be published during her spring statement on Wednesday.
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Jessica Barnaby, deputy director for public sector finances at the ONS, said: “At £10.7bn, public sector borrowing in the month of February was virtually unchanged on the same month last year. However, borrowing over the financial year to date was up nearly £15bn on the equivalent period last year.”
The borrowing figure refers to the difference between what the government spends on the public sector and what it receives in income from tax and other receipts.
Overall spending on public services increased compared with the same month last year, with things like social benefits and investment spending more than had been forecast, the ONS said.
Reeves is set to use the spring statement to announce further cuts to government spending in an effort to maintain fiscal discipline. Under her fiscal rules, the chancellor has committed to balancing the current budget, which excludes government investment, by 2029-30.
Chief secretary to the Treasury, Darren Jones said: “We must go further and faster to create an agile and productive state that works for people. That’s why we’re refocusing the public sector on our missions and, for the first time in 17 years, going through every penny of taxpayer money line by line, to make sure it is helping us secure Britain’s future through the Plan for Change.
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“At the core of this urgent mission is sound public finances, based on our non-negotiable fiscal rules. This government will never play fast and loose with the public finances.”
The national debt has climbed to about 95.5% of gross domestic product (GDP), leaving it at levels last seen in the early 1960s.
Public sector net debt excluding public sector banks was 0.1 percentage points higher than at the same point last year.
Alison Ring, ICAEW director of public sector and taxation, said: “The chancellor will be disappointed that late self-assessment tax receipts were not sufficient to offset overruns in public spending ahead of the spring statement.
“Although today’s data is too late to be reflected in the OBR forecast the chancellor will present to parliament next Wednesday, it will still influence her thinking about whether to cut the amount of public spending allocated to this summer’s three-year spending review.
“Any potential improvement to the public finances caused by the proposed cuts to welfare are a long way, off so the key question is whether the chancellor can avoid major decisions on further tax rises ahead of the autumn budget later this year, or if pressures from today’s numbers will force her hand.”
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