The UK government borrowed more than anticipated last year, intensifying pressure on public finances ahead of potential economic fallout from US tariffs. Official figures reveal borrowing—the gap between public spending and tax revenue—reached £151.9 billion in the year to March, marking a £20.7 billion increase from the previous year.
The data comes as Chancellor Rachel Reeves prepares to advocate for a potential US trade deal during her visit to Washington, aiming to shield UK exports from looming import taxes. The higher-than-expected borrowing has fueled speculation that Reeves may resort to spending cuts or tax hikes later this year to adhere to her strict fiscal rules.
Darren Jones, Chief Secretary to the Treasury, reaffirmed that the chancellor’s borrowing limits are “non-negotiable,” emphasizing that the government would “never play fast and loose with the public finances.”
Ruth Gregory, Deputy Chief UK Economist at Capital Economics, noted that the borrowing surge occurring even before US tariff impacts—increases the likelihood of further tax increases. “Reeves may soon face the tough choice of cutting spending or raising taxes in the Autumn Budget to meet her fiscal targets,” Gregory added.
One of Reeves’s key economic principles is avoiding borrowing for day-to-day expenditures. However, weak economic growth and rising interest rates on government debt have raised concerns about her ability to maintain these rules without additional tax measures.
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