UK Government borrowing overshoots forecasts ahead of spring statement
Public sector net borrowing was £10.7 billion in February, the Office for National Statistics said.
UK Government borrowing soared above forecasts last month as public sector spending rose, putting pressure on Chancellor Rachel Reeves ahead of her spring statement.
The Office for National Statistics (ONS) said public sector net borrowing was £10.7 billion in February.
This was £100 million more than the same month last year and the fourth-highest February on record.
It was also £4.2 billion more than had been forecast by the Government’s official forecaster, the Office for Budget Responsibility (OBR), and more than some economists had been expecting.
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 central government spending totalled £93 billion in February, £3.8 billion more than the same month last year, when the Conservative government was in power.
Things like social benefits and investment spending was more than the OBR had projected, leading to the higher-than-forecast February figure, the ONS said.
Meanwhile, central government receipts – the amount of money it receives, predominantly through taxes – rose by £3.2 billion to £87.7 billion for the month.
Borrowing over the financial year to date was up nearly £15 billion on the same period a year before, the ONS said.
The figures come less than a week before Ms Reeves will lay out her tax and spending plans in the Government’s spring statement.
Ms Reeves is not expected to make tax changes when she delivers the statement next Wednesday but she will be responding to new forecasts from the OBR.
It comes against a backdrop of tighter headroom when it comes to the fiscal rules she set herself in October.
Economists said weaker public finances mean Ms Reeves faces “tough decisions” on government spending.
James Smith, developed market economist for ING, said: “The public finances are operating on increasingly fine margins, at a time where spending pressures are far from diminishing.
“Defence is unlikely to be the only department that requires a fresh cash injection over the next few years.
“And redirecting spending from one area to another – as we’ve seen with the foreign aid budget being tapped to fund higher military spending – can only go so far.”
He said the Treasury was likely to “curtail its future spending ambitions” and that tax rises in the autumn were “inevitable”.
Isabel Stockton, senior researcher for the Institute for Fiscal Studies (IFS), said: “Today’s data on government spending, borrowing and revenues underscore the challenges facing the Chancellor as we head into the week of the spring statement.
“Having boxed herself in with promises to meet her fiscal targets, not to raise taxes further and not to return to austerity for public services, easy or risk-free options for the Chancellor are in short supply.”
Darren Jones, Chief Secretary to the Treasury, said the Government was “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”.
“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.”
