- Government borrowing for February comes in higher than forecast at £10.7 billion
- Borrowing for the year until February £4.7 billion higher than the OBR had forecast for the full financial year.
- Cost of servicing debt came in at £7.4 billion – equal to previous February’s interest payments.
Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK borrowing figures:
“Nothing in today’s borrowing figures will surprise Rachel Reeves but they do give a real insight into the scale of the challenge facing the chancellor when she comes to deliver her Spring Statement next week.
“Interest payments on all the debt that’s been piled on in recent years is still gobbling up a big chunk of the cash coming into Treasury coffers and after yesterday’s Bank of England rate hold, yields on the benchmark 10-year government bond ticked up.
“Pay rises and inflation have increased costs, while economic uncertainty and an expectation that growth is set to be lacklustre this year have dented confidence.
“Whilst the tax take has increased, the previous government’s NI cuts are also putting pressure on the public purse, and this government’s changes to employer NI have yet to take effect.
“The government wants to spend more; on defence, on building the UK’s green infrastructure to power growth for generations to come.
“But with such geopolitical uncertainty, fiscal rules are important and breaking them would be costly.
“Not breaking them leaves the chancellor with few avenues to choose from, especially with her fiscal headroom almost certainly evaporated, and probably in deficit.
“Promises not to increases taxes will mean even fewer choices, more cuts to public spending and the increased likelihood that the unpopular fiscal drag of frozen tax thresholds will remain with us way beyond 2028.”
