Chancellor Rachel Reeves has been put under further pressure over the state of the nation’s finances ahead of next week’s Budget as the latest official figures showed higher-than-expected government borrowing last month.
The Office for National Statistics (ONS) said public sector borrowing stood at £17.4 billion last month, £1.8 billion lower than a year ago but the third highest level for October since records began.
The figure was more than the £15 billion expected by most economists and higher than the £14.4 billion forecast in March by the UK’s independent fiscal watchdog, the Office for Budget Responsibility (OBR).
Borrowing for the seven months of the financial year to date was £116.8 billion – £9 billion higher than the same period a year ago and £9.9 billion above the OBR’s forecasts in March.
The figures come less than a week before the November 26 Budget, when Ms Reeves is expected to reveal a raft of measures to help plug a black hole in the UK public finances, estimated at up to £50 billion by some economists.
While the Government appears to have rowed back on reported earlier plans to increase income tax, it is widely expected to look at other ways to raise cash to tackle the shortfall and ensure the Chancellor remains on track to meet her fiscal rules.
Treasury Chief Secretary James Murray said next week’s Budget would set out how Ms Reeves intends to “cut debt”.
He said: “Currently, we spend £1 in every £10 of taxpayer money on the interest of our national debt.
“That money should be going to our schools, hospitals, police and armed forces.
“That is why we are set to deliver the largest primary deficit reduction in both the G7 and G20 over the next five years – to get borrowing costs down.”
The figures showed public sector borrowing was revised lower by £400 million for the first six months of the financial year.
ONS chief economist Grant Fitzner said: “Borrowing this October was down on the same month last year, although it was still the third-highest October figure on record in cash terms.
“While spending on public services and benefits were both up on October last year, this was more than offset by increased receipts from taxes and national insurance contributions.”
