- Changes to employers' National Insurance contributions helped boost Treasury coffers by £1.7 billion in April
- Debt interest was £0.5 billion lower than April 2024
- Borrowing came in at £20.2 billion - £1 billion more than last April and the 4th highest recorded for the month
Danni Hewson, AJ Bell head of financial analysis, comments on the latest public sector finances:
“It’s not the start to the year the Chancellor would have wished for. Despite the impact of her budget changes to employers' National Insurance kicking in and boosting Treasury coffers by almost £2 billion, April’s numbers suggest there is still much more to do.
“Inflation linked benefit increases, pay rises and increasing costs have all piled additional pressure on the public purse and borrowing for this April overshot that needed in the same month last year and came in significantly above where economists had expected.
“Going into next month’s spending review Rachel Reeves must feel like a tightrope walker being pushed and pulled in all directions by the demands of different departments and public opinion.
“Moves to at least partially roll back her first money raiser, abolishing universal winter fuel payments, highlights the difficulties the government is facing.
“Spending more on public services, pay rises and benefits requires the pot of money being tapped to also be filled.
“If it’s not filled as quickly as it’s drained then the Chancellor has no hope of keeping to her fiscal rules which suggests increasingly difficult decisions will have to be taken and maintained.
“With many Labour politicians clearly uncomfortable with some of the decisions being taken or discussed, it’s hardly surprising that more and more column inches are being given over to speculation that there will have to be further tax increases at the next budget.
“The government hoped it could grow its way out of the situation it inherited, and the economy has been faring better than many had expected. But with inflation rising and geopolitics fractious, everyone will be wondering how good the Chancellor is at keeping her balance.”
