Official figures reveal that UK government borrowing greatly surpassed expectations in February, heightening the pressure on Chancellor Rachel Reeves as she readies for her spring statement next week.
In February, government borrowing reached £10.7bn, making it the fourth-highest February amount recorded since 1993, according to the Office for National Statistics (ONS). This figure was significantly above the City’s prediction of approximately £7bn.
For the financial year up to February, borrowing totaled £132.2bn, increasing by £14.7bn compared to the same period last year. In October, the Office for Budget Responsibility (OBR) forecasted public sector borrowing to reach £127.5bn for the entire financial year ending in March. An updated forecast by the OBR is anticipated during her spring statement on Wednesday.
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Jessica Barnaby, deputy director for public sector finances at the ONS, noted: “Public sector borrowing for February stood at £10.7bn, showing little change from the previous year. However, borrowing for the financial year so far has increased by nearly £15bn compared to the same time last year.”
The borrowing figure indicates the deficit between government expenditures on public services and the income generated from taxes and other sources.
Overall spending on public services rose compared to the same month last year, with expenditures on social benefits and investment surpassing forecasts, as reported by the ONS.
In her spring statement, Reeves is expected to announce additional cuts to government spending to uphold fiscal discipline. She is committed to balancing the current budget, excluding government investments, by the financial year 2029-30.
Chief Secretary to the Treasury, Darren Jones, stated: “We must accelerate efforts to establish an agile and productive government that serves the public effectively. That’s why we are refocusing the public sector on our missions and, for the first time in 17 years, meticulously reviewing every single penny of taxpayer money to ensure it contributes to securing Britain’s future through the Plan for Change.”
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“At the heart of this urgent initiative is sound public finances, grounded in our non-negotiable fiscal guidelines. This government will always uphold our public finances responsibly.”
The national debt has risen to around 95.5% of gross domestic product (GDP), a level not seen since the early 1960s.
