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UK government borrowing unexpectedly rose in April, piling pressure on chancellor Rachel Reeves ahead of a high-stakes spending review next month.
Figures published on Thursday by the Office for National Statistics showed that borrowing — the difference between public sector spending and income — was £20.2bn in the first month of the new tax year, up from a shortfall of £19.1bn in April 2024.
Economists polled by Reuters had forecast that government borrowing would fall to £17.9bn last month.
April’s overshoot was led by an increase in spending on public services and benefits, the ONS said. The jump in spending overshadowed a rise in receipts, which was partly down to higher national insurance contributions announced in the Budget kicking in.
Despite the boost from NI contributions, “the fiscal year got off to a poor start,” said Ruth Gregory, economist at the consultancy Capital Economics. “This raises the chances that if the chancellor wishes to stick to her fiscal rules, more tax hikes in the Autumn Budget will be required.”
Reeves will set out detailed expenditure plans for individual government departments in her June 11 spending review — the first by a Labour government since the 2000s.
She is under pressure to meet her fiscal rule to balance day-to-day spending with revenues by 2029-30 while improving public services and spurring growth.
The chancellor’s slender room for manoeuvre, which was last calculated at £9.9bn, is set to be put under further pressure by the economic impact of US President Donald Trump’s tariffs.
In a memo sent to Reeves before her Spring Statement in late March, deputy prime minister Angela Rayner urged the chancellor to make further tax increases rather than cutting public spending.
Responding to April’s figures, Darren Jones, chief secretary to the Treasury, said: “After years of economic instability crippling the public purse, we have taken the decisions to stabilise our public finances, which has helped deliver four interest rate cuts since August, cutting the cost of borrowing for businesses and working people.”
Thursday’s ONS data also showed government borrowing hit £148.3bn in the 2024/25 fiscal year — a revision of the ONS’s previous estimate of £151.9bn, but still £11bn above the £137.3bn forecast by the Office for Budget Responsibility, the UK’s fiscal watchdog.
