UK Government Borrowing Exceeds Forecast by 146 Billion Pounds in Financial Year End

The British government’s borrowing has surpassed official forecasts by £14.6 billion in the last financial year, pointing towards potential tax increases or spending reductions under Chancellor Rachel Reeves’ leadership. The Office for National Statistics reports borrowing reached £151.9 billion in the year to March, marking a £20.7 billion increase from the previous year.

This figure represents the third-highest borrowing level since records began in 1947, surpassed only by pandemic-era spending in 2021 and the global financial crisis in 2010. March alone saw borrowing of £16.4 billion, significantly exceeding the Office for Budget Responsibility’s spring statement forecast of £137.3 billion.

Rising benefit payments and public sector wages have offset increased tax revenues, leading to a wider deficit. Central government operational spending increased by £30 billion to £436 billion, while benefit expenditure rose by £14.6 billion to £306.1 billion. Total central government spending breached the £1 trillion mark, representing a £50 billion increase.

The mounting pressure on public finances comes amid global economic uncertainties, particularly with President Trump’s reciprocal tariff plan implementation. The International Monetary Fund has revised down UK economic growth forecasts for 2025 to 1.1% from 1.6%, warning of potential constraints on worldwide economic activity due to trade tensions.

Public sector debt now stands at £2,643.8 billion, equivalent to 95.8% of gross domestic product, maintaining levels not witnessed since the 1960s. The Treasury’s chief secretary, Darren Jones, emphasised the government’s commitment to fiscal responsibility, stating that “fiscal rules are non-negotiable” while pledging to scrutinise all taxpayer spending.

The deteriorating fiscal situation may force the chancellor to make difficult decisions in the autumn budget, potentially including tax increases or spending cuts to maintain fiscal stability and meet government borrowing targets.