Borrowing by the UK government rose by more than expected in the latest financial year, new official figures show. Public sector net borrowing rose to £151.9 billion in the year to the end of March, the Office for National Statistics (ONS) said.
The figure will come as a blow for chancellor Rachel Reeves, who is visiting Washington this week for major Trump trade deal talks. It comes just a day after the UK’s economic growth forecast was downgraded by the International Monetary Fund (IMF).
The new borrowing figure is £14.6 billion higher than the £137.3 billion that was forecast by the Office for Budget Responsibility. The yearly figure was also £20.7 billion more than the same period a year earlier.
It also marks the third-highest level of borrowing in any financial year since records began in 1947, the ONS said. It comes only behind the Covid pandemic in the year to 2021, and the 2010 financial year following the global crisis.
The new figures also show that borrowing rose to £16.4 billion last month, marking the third-highest March borrowing since monthly records began.
Grant Fitzner, the ONS’s chief economist, said: “Our initial estimates suggest public sector borrowing rose almost £21 billion in the financial year just ended as, despite a substantial boost in income, expenditure rose by more, largely due to inflation-related costs, including higher pay and benefit increases.
“At the end of the financial year, debt remained close to the annual value of the output of the economy, at levels last seen in the early 1960s.”
Chief Secretary to the Treasury, Darren Jones, said: “Economic stability is crucial within a changing world.
“We will never play fast and loose with the public finances, that’s why our fiscal rules are non-negotiable and why we are going through every penny of taxpayer money spent, line by line, for the first time in 17 years to tear out waste.
“We are laser-focused on making sure taxpayer money is delivering our Plan for Change missions to put more money in people’s pockets, rebuild the NHS and strengthen our borders.”
The ONS figures come as chancellor Rachel Reeves is set to attend the annual meetings of the International Monetary Fund (IMF) and World Bank in Washington.
On Tuesday, the IMF slashed the UK’s economic growth forecast, and delivered a warning that the fallout from Donald Trump’s trade war will hit Britain harder than the rest of Europe.
The global economic organisation forecast that growth will stall be 0.5 per cent in 2025, compared to its previous forecast, adding a further downgrade of 0.1 per cent in 2026. This would mean the UK economy is set to grow just 1.1 per cent next year, and 1.4 per cent the year after, in a blow to the chancellor who has promised to deliver strong economic growth.
Shadow business secretary Andrew Griffith criticised the latest ONS borrowing figure as “grim,” saying: “combined with growth downgrades by the IMF yesterday, they show you can’t spend your way to prosperity.”
“Only businesses create jobs and growth but this government are hiking up taxes, piling on more red tape and attacking wealth creators.”
