Chancellor under pressure over state of public finances as borrowing soars again
Share:
Chancellor Rachel Reeves is under increased scrutiny over the state of Britain's public finances, following official figures revealing a larger-than-anticipated surge in government borrowing last month to nearly £18bn. The Office for National Statistics (ONS) reported that public sector net borrowing was at £17.8bn last month – marking it as the third highest for any December on record. Borrowing was up by £10.1bn compared to the same month last year and exceeded the £14.1bn predicted by most economists.
The ONS attributed this increase largely to skyrocketing debt interest payments, which have risen by £3.8bn year-on-year due to higher Retail Prices Index inflation. So far, borrowing in the financial year stands at £129.9bn, £8.9bn more than the same period a year earlier and the second-highest financial year-to-December borrowing since monthly records began – only surpassed by the borrowing witnessed during the peak of the pandemic in 2020. Year-to-date borrowing is £4.1bn more than the £125.9bn forecast by the independent fiscal watchdog, the Office for Budget Responsibility (OBR).
This comes in the wake of instability in the UK government bond market at the start of the year, which caused public sector borrowing costs to skyrocket, leading to concerns that Ms Reeves may fail to meet her fiscal rules. Treasury chief secretary Darren Jones has made it clear that the government is taking a firm stance on economic matters, stating: "Economic stability is vital for our number one mission of delivering growth. That’s why our fiscal rules are non-negotiable and why we will have an iron grip on the public finances.".
