Government borrowing hits highest December level for four years


The Office for National Statistics (ONS) has stated that government borrowing in December was higher than expected, reaching its highest level for the month in four years. The borrowing figure was £17.8bn, up £10.1bn from December 2023. The ONS cited increases in debt interest, spending on public services and benefits as the cause for the rise in government borrowing. Although there was an increase in tax revenues, the previous government’s cut to National Insurance resulted in the offsetting of these gains.

The rise in interest charged on government debt earlier this month, which has since fallen back, coupled with the borrowing costs, could threaten Chancellor Rachel Reeves’ economic plans. In light of the recent news that the UK economy had flatlined, the government has reiterated its commitment to growing the economy in order to boost living standards. The interest charged on government debt last month stood at £8.3bn, an increase of £3.8bn compared to the previous year. This marks the third-highest December debt interest repayments seen since records began.

UK economist at Capital Economics, Alex Kerr, called December’s overshoot in borrowing “further disappointing news for the chancellor”. He noted that much of the increased borrowing was due to a one-time £1.7bn payment from the government to repurchase military accommodation in the private sector. The borrowing estimate for December is made up of many estimates, which are often revised retrospectively. This is particularly true around this time of year, when many individuals submit self-assessment tax returns, resulting in an increase in government revenue.

With a financial year-to-date figure of £129.9bn, borrowing in the current cycle so far is up £8.9bn on the figure for the same period a year earlier. This represents the second-highest financial year-to-December borrowing seen since records began, with the highest being during the Covid pandemic in 2020. Following the publication of the figures, Chief Secretary to the Treasury Darren Jones pledged to “root out waste” to ensure that taxpayers’ money is being spent productively, adding that “economic stability is vital for our number one mission of delivering growth

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