The UK government borrowed significantly more than expected in February, raising concerns about the country’s fiscal health and increasing pressure on Chancellor Rachel Reeves as she prepares for her spring statement. Official data reveals a challenging financial landscape requiring decisive action.
According to the Office for National Statistics (ONS), public sector borrowing reached £10.7bn in February. This figure marks the fourth-highest February borrowing since records began in 1993, significantly surpassing City forecasts of around £7bn. This unexpected surge in borrowing adds to the existing fiscal pressures facing the government.
For the financial year to February, total borrowing reached £132.2bn, a substantial increase of £14.7bn compared to the same period last year. This figure already exceeds the Office for Budget Responsibility’s (OBR) October projection of £127.5bn for the entire financial year ending in March. An updated OBR forecast is anticipated during the Chancellor’s spring statement on Wednesday.
Jessica Barnaby, deputy director for public sector finances at the ONS, noted that while February’s borrowing was similar to last year’s, the cumulative borrowing for the financial year so far is significantly higher. “At £10.7bn, 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 £15bn on the equivalent period last year,” she stated. Public sector borrowing represents the difference between government spending and income from taxes and other sources.
Increased public spending contributed to the higher borrowing, driven by factors such as social benefits and investment expenditures exceeding initial forecasts. The ONS highlighted that overall spending on public services rose compared to the same month last year. This emphasizes the need for careful management of public finances.
In response to these challenges, Chancellor Reeves is expected to announce further spending cuts in her spring statement. These measures aim to reinforce fiscal discipline and align with her commitment to balancing the current budget, excluding government investment, by 2029-30. This underlines the government’s commitment to long-term fiscal sustainability.
Chief Secretary to the Treasury, Darren Jones, emphasized the government’s commitment to fiscal responsibility. He stated, “We must go further and faster to create an agile and productive state that works for people… 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.” This reinforces the message of prudent financial management.
The UK’s national debt has risen to approximately 95.5% of GDP, reaching levels not seen since the early 1960s. This significant increase in national debt underscores the need for effective fiscal policies and sustainable public spending. This historical context emphasizes the magnitude of the current fiscal situation. The Chancellor’s spring statement will be crucial in outlining the government’s strategy for addressing these challenges and ensuring long-term economic stability.
