PRESSURE is piling on Chancellor Rachel Reeves as UK Government borrowing soared above forecasts last month – and reports say growth forecasts are to be cut in half.
The Office for National Statistics (ONS) said on Friday that public sector net borrowing was £10.7 billion in February.
This was £100 million more than the same month last year and the fourth-highest February on record.
It was also £4.2bn more than had been forecast by the Government’s official forecaster, the Office for Budget Responsibility (OBR), and more than some economists had been expecting.
The borrowing figure refers to the difference between what the Government spends on the public sector and what it receives in income from tax and other receipts.
Overall central government spending totalled £93bn in February, £3.8bn more than the same month last year, when the Conservative government was in power.
Things like social benefits and investment spending was more than the OBR had projected, leading to the higher-than-forecast February figure, the ONS said.
Meanwhile, central government receipts – the amount of money it receives, predominantly through taxes – rose by £3.2bn to £87.7bn for the month.
The figures come less than a week before Reeves will lay out her tax and spending plans in the Government’s Spring Statement.
Reeves is not expected to make tax changes when she delivers the statement next Wednesday but she will be responding to new forecasts from the OBR.
The Telegraph reported that the OBR will downgrade the expected growth rate for 2025/2026 from 2% to around 1%.
The numbers will be problematic for a Labour Government who have staked everything on economic growth, and have spent huge amounts of political capital defending cuts to benefits and disability payments.
Jessica Barnaby, the ONS’s deputy director for public sector finances, said: “At £10.7 billion, public sector borrowing in the month of February was virtually unchanged on the same month last year.
“However, borrowing over the financial year to date was up nearly £15 billion on the equivalent period last year.”
Darren Jones, Chief Secretary to the Treasury, said the Government was “going through every penny of taxpayer money line by line to make sure it is helping us secure Britain’s future through the plan for change”.
“At the core of this urgent mission is sound public finances, based on our non-negotiable fiscal rules.
“This Government will never play fast and loose with the public finances.”
