UK government borrowing for February came in higher than expected, increasing pressure on Chancellor Rachel Reeves as she prepares to deliver her Spring Statement next week. Official figures revealed that borrowing—the gap between government spending and tax income—reached £10.7 billion last month, significantly above the £6.5 billion predicted by the government’s independent forecaster.
The higher-than-expected borrowing raises concerns about the Chancellor’s ability to meet her self-imposed fiscal rules, which include not borrowing to fund day-to-day public spending and reducing debt as a share of the UK’s economic output by 2029/30. Darren Jones, chief secretary to the Treasury, emphasized the government’s commitment to fiscal discipline, stating, “We must go further and faster to create an agile and productive state that works for people,” and reaffirming that the rules are “non-negotiable.”
Economists have warned that the increased borrowing adds pressure on Reeves to announce spending cuts in her Spring Statement on Wednesday. Dennis Tatarkov, senior economist at KPMG, noted that the figures raise the risk of the Chancellor missing her fiscal targets, while Isabel Stockton of the Institute for Fiscal Studies highlighted the lack of “easy or risk-free options” for Reeves, given her promises to avoid tax hikes and austerity measures.
Alex Kerr, UK economist at Capital Economics, predicted further spending cuts, including potential reductions in welfare, on top of measures already announced. The Office for Budget Responsibility (OBR) had previously indicated that Reeves had a £9.9 billion buffer to meet her borrowing rules, but analysts suggest this cushion may now be depleted.
Pantheon Macroeconomics echoed these concerns, stating that the UK’s “weak public finances” will likely lead to spending cuts in the Spring Statement and potential tax increases later in the year. As the Chancellor prepares to address the nation, the focus will be on how she balances fiscal responsibility with the need to support public services and economic growth.
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