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Newly released data reveals that the UK government’s borrowing for April surpassed expectations, reaching its highest level for the month since the onset of the Covid-19 pandemic in 2020. According to the Office for National Statistics (ONS), borrowing—the gap between government expenditure and tax revenue—totalled £24.3 billion last month. This figure is £4.9 billion greater than the corresponding period last year and exceeds the £20.9 billion forecast made by the Office for Budget Responsibility (OBR), the government’s independent fiscal forecaster.
Grant Fitzner, the ONS chief economist, noted that April’s borrowing was “substantially higher” than a year ago. He explained that although tax receipts had increased, this was outweighed by increased spending, particularly on benefits and other government costs. Benefit spending alone rose by £2.7 billion compared to April 2025, driven largely by inflation-linked increases in various benefits and a rise in the state pension, which is connected to earnings. Additionally, payments on debt interest hit a record high for April at £10.3 billion, up £0.9 billion from the previous year.
Analysts commented on these figures, pointing to concerns about the UK’s fiscal outlook. Dennis Tatarkov, a senior economist at KPMG UK, highlighted that borrowing had come in above OBR projections due primarily to higher central government spending. He warned that the “increasingly uncertain economic outlook” might influence fiscal policy decisions later in the year. Ruth Gregory, deputy chief UK economist at Capital Economics, remarked that the financial data showed the country’s fiscal situation was already worse than expected before the full impact of the rising energy prices caused by the Iran war had been felt.
The surge in energy costs since the conflict began has led analysts to downgrade growth forecasts for the UK economy. Households are facing higher fuel bills, and the Bank of England is no longer expected to reduce interest rates. Slower economic growth is expected to limit the government’s tax revenue growth, although taxes on petrol and North Sea oil and gas production could provide some additional income. To ease the burden of rising living costs, the government recently announced measures including a VAT cut on family day-out tickets, free bus travel for under-16s in England during August, and reductions in import duties on certain basic foods. These initiatives will be partly funded by changes to tax rules affecting some UK-based oil and gas companies
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