The government’s borrowing for the year ending in March exceeded expectations due to increased spending on pay and benefits, according to official data. The borrowing, which represents the difference between government spending and income from taxes, totaled £151.9bn for the year, an increase of £20.7bn compared to the previous year. This figure surpassed the predicted £137.3bn forecast by the UK’s official forecaster. Chancellor Rachel Reeves is scheduled to attend the annual meetings of the IMF and World Bank in order to engage with other finance ministers and advocate for a trade deal with the US.
A significant number of countries, including the UK, have faced tariffs on goods entering the US, as President Donald Trump seeks to disrupt the established global trade order to bolster American manufacturing and employment opportunities. The introduction of tariffs, which are taxes imposed on imported goods, can impede trade and have contributed to the IMF downgrading the UK’s economic growth forecast for 2025 from 1.6% to 1.1%. The IMF has also warned of steep increases in borrowing costs and inflation that may impact UK growth.
The government has prioritized economic growth to enhance living standards, but businesses have struggled due to higher taxes, while households have faced escalating expenses. Grant Fitzner, the chief economist at the ONS, highlighted that while the government experienced a substantial rise in tax revenue, spending increased notably due to rising costs linked to inflation, including higher pay and benefits. At the close of the financial year, national debt remained close to the annual value of the economy’s output, reaching levels last observed in the early 1960s.
The Office for National Statistics reported that borrowing in March alone amounted to £16.4bn, making it the third-highest March borrowing since monthly records commenced in 1993. Government spending on debt interest surged by £1.3bn to £4.3bn in the same month. The noteworthy rise in borrowing has led some economists to suggest that spending cuts and tax increases could be imminent if the chancellor intends to adhere to her self-imposed borrowing constraints. Shadow chancellor Mel Stride described the figures as “alarming, but not surprising,” emphasizing the repercussions of Rachel Reeves’ decisions on the British populace
Read the full article from The BBC here: Read More
