Auto Amazon Links: No products found. Blocked by captcha.
Recent official figures reveal that UK government borrowing in October exceeded expectations, although it decreased compared to the same month last year. According to the Office for National Statistics (ONS), borrowing—the gap between public expenditure and tax revenue—stood at £17.4 billion in October, down from £19.2 billion in October 2024. These statistics arrive just days before Chancellor Rachel Reeves is due to present her Budget, where she has indicated that both tax increases and spending reductions are under consideration.
Grant Fitzner, the chief economist at ONS, pointed out that despite the year-on-year fall, the October borrowing figure remains significant, marking it as the third-highest for that month in cash terms. While spending on public services and welfare rose compared to October last year, increased tax and National Insurance receipts more than balanced this out, resulting in a net decrease in borrowing of £1.8 billion. Forecasts had anticipated a borrowing figure of around £15 billion, which is higher than the Office for Budget Responsibility’s (OBR) previous estimate of £14.4 billion from March.
Looking at the broader scope of the current financial year, borrowing from April to October reached £116.8 billion, rising by £9 billion compared to the same period in 2024. This level of borrowing represents the second highest recorded for those seven months since records began in 1993, trailing only behind 2020. James Murray, Chief Secretary to the Treasury, emphasized the government’s goal of reducing borrowing over the parliamentary term. He highlighted that 10% of taxpayer funds currently go toward servicing interest on the national debt, funds he believes should instead support public services like education, healthcare, and security.
Shadow Chancellor Sir Mel Stride criticized the borrowing levels, stating that this year’s borrowing is the highest outside of the pandemic period, and urged the government to rein in spending to avoid tax hikes. Investment bank ING’s James Smith suggested that the recent borrowing data, while unwelcome for the chancellor before the Budget, is unlikely to influence decisions immediately, as fiscal strategies mainly target developments later in the decade. Meanwhile, Institute for Fiscal Studies economist Nick Ridpath noted that government borrowing has exceeded OBR forecasts by around £10 billion so far this year. He warned that these figures reveal ongoing uncertainties related to public spending pressures, tax revenue fluctuations, and the persistent costs of managing government debt.
Chancellor Reeves faces the challenge of reconciling these figures with her self-imposed fiscal rules, which aim to end borrowing for routine public spending and reduce national debt relative to the economy by the conclusion of the current parliamentary term. Recent OBR assessments reportedly estimate a £20 billion shortfall that needs addressing in the forthcoming Budget. Ridpath highlighted the risks associated with minimal fiscal leeway, suggesting the Chancellor might take steps to enhance fiscal space in her upcoming financial statement.
In addition to borrowing data, the ONS reported a 1.1% decline in retail sales for October, marking the first monthly drop since May. Fitzner explained that slower sales in supermarkets, clothing stores, and online outlets likely reflect consumers delaying purchases in anticipation of Black Friday promotions. Capital Economics’ Ruth Gregory described the overall economic indicators, including borrowing and retail sales, as depicting a “pretty grim picture.” While she acknowledged that the retail sales decrease may be less concerning given the previous four months of growth, ongoing declines in consumer confidence suggest that public sentiment remains subdued
Read the full article from The BBC here: Read More
Auto Amazon Links: No products found. Blocked by captcha.