UK (Parliament Politics Magazine) – UK borrowing reached £20.2bn in September, the highest in five years, driven by higher welfare spending and debt costs ahead of the autumn budget.
As reported by The Guardian, rising debt interest and higher welfare payments pushed UK borrowing to a five-year high in September, worsening public finances.
What did the ONS data show about the UK deficit and spending?
The Office for National Statistics’ latest figures show that UK public sector net borrowing hit £20.2bn in September, up £1.6bn from last year and the highest September total since 2020.
The ONS reported that higher tax receipts failed to offset rising debt interest and welfare costs, which surged amid climbing inflation. Economists surveyed by Reuters had predicted UK borrowing of £20.8bn for September.
The latest data revealed total borrowing this financial year has reached £99.8bn, £7.2bn above the Office for Budget Responsibility’s March forecast, adding pressure on Chancellor Rachel Reeves ahead of her November budget.
UK borrowing costs on global markets have eased in recent weeks, reducing the expense of financing government debt.
Despite recent easing, Britain’s interest bill remains historically high, with annual borrowing set to exceed £100bn, nearly 10% of the budget, tightening Whitehall department spending.
What did James Murray say about UK borrowing and public finances?
Referring to the recent borrowing costs, Chief Secretary to the Treasury, James Murray stated,
“This government will never play fast and loose with the public finances. We know that when you lose control of the public purse it’s working people who pay the price.”
He said,
“That’s why we plan to bring down borrowing, and according to IMF data, are set to deliver the largest primary deficit reduction in both the G7 and G20 over the next five years.”
Mr Murray added,
“We are cutting waste, improving efficiency and transforming our public services for the future – so that we can be rid of costly debt interest, instead putting that money into our NHS, schools and police.”
What did Nabil Taleb say about UK debt and the Autumn budget?
Nabil Taleb, economist at PwC UK, stated,
“The interest payable on central government debt was higher than any previous September on record. Higher debt servicing costs as a share of total revenues will leave the public finances more exposed to future economic shocks.”
He said,
“The Chancellor faces an increasingly difficult balancing act ahead of the Autumn budget, with her fiscal headroom all but exhausted by a mix of weaker growth prospects, higher borrowing costs and rising spending pressures.”
Mr Taleb added,
“An expected downgrade to the OBR’s long-term growth forecasts will only add to the squeeze.”
What did Mel Stride say about Rachel Reeves and public finances?
Shadow Chancellor Mel Stride warned that Rachel Reeves’ mismanagement of public finances is saddling the next generation with Labour’s debts.
He added,
“If Rachel Reeves had a plan – or a backbone – she would stand up to her backbenchers, get spending under control and cut the deficit. Instead she is plotting to hike taxes yet again to pay for her failures.”
What did Martin Beck say about UK borrowing and the budget deficit?
Martin Beck, lead economist at WPI Strategy, said lower-than-expected borrowing still leaves the chancellor in a tricky position ahead of the budget.
He stated, “
As things stand, total borrowing in 2025–26 could overshoot the OBR’s full-year forecast by about £10bn, pushing the deficit to close to 5% of GDP.”
Mr Beck added,
“That’s uncomfortably large for an economy operating near full employment and long past the shocks of the pandemic and energy crisis.”
What did Ruth Gregory say about UK borrowing overshoot and Reeves’ budget challenge?
Ruth Gregory, deputy UK economist at Capital Economics, warns September data shows weak public finances despite steady economic growth.
He said,
“The government borrowed £20.2bn on the main public sector net borrowing measure in September and £13.4bn (OBR forecast £12.2bn) on the current borrowing measure (which is what matters for the Chancellor’s fiscal mandate).”
Mr Gregory added,
“This means that after six months of the financial year, public sector net borrowing is already £7.2bn higher than the OBR forecast at the Spring Statement in March. The overshoot in the Chancellor’s chosen fiscal mandate of the current budget is even greater, at £13.0bn. It would now take a big turnaround over the remainder of the year to put borrowing in 2025/26 back on track to meet the OBR’s forecast.”
What did the IFS say about Rachel Reeves’ tax plans for the November budget?
The Institute for Fiscal Studies urged Rachel Reeves to exceed minimum tax hikes in her November 26 budget.
The thinktank suggests the chancellor could exceed the £22bn target to rebuild a £10bn fiscal buffer and curb ongoing speculation.
The IFS warned that bolder tax measures could restore confidence in UK finances and lower borrowing costs for Britain.
Ms Reeves is expected to face a £20-40bn deficit in the upcoming budget. She signals potential welfare cuts as tax hikes and an OBR productivity downgrade weigh on the budget.
UK 2025 Autumn Budget
Chancellor may raise taxes to cover £22bn shortfall, using threshold freezes and targeting pensions, inheritance, and property in the November Budget.
