UK government borrowing rises to £20.2 billion as pressure mounts on Rachel Reeves

Independent

22-05-2025

UK government borrowing surged to £20.2 billion in April, exceeding forecasts and raising concerns about Chancellor Rachel Reeves 's ability to meet her fiscal targets.
This marks the fourth-highest April borrowing figure on record, a £1 billion increase compared to the same period last year, according to the Office for National Statistics (ONS).
Public sector net borrowing, the difference between government spending and income (primarily tax receipts), significantly overshot analyst predictions of £17.6 billion.
This poses a challenge for Reeves, who aims to balance day-to-day spending with revenues by 2029-30 while simultaneously improving public services and boosting economic growth.
Several factors contributed to the increased borrowing, including rises in public sector pay, national insurance payments, and higher benefit and state pension payouts.
Central government spending on goods and services also saw a substantial year-on-year increase of £4.2 billion, reaching £37.9 billion, driven by April pay rises and inflationary pressures.
Meanwhile, social benefits paid by the state rose £1.3 billion to £26.8 billion after inflation-linked rises in many benefits.
Public sector net debt was estimated at 95.5 per cent of UK GDP (gross domestic product) at the end of April 2025, meaning the proportion of debt was 0.7 percentage points higher than a year earlier and remains at levels last seen in the early 1960s.
Deputy director for public sector finances at the ONS Rob Doody said: 'At £1 billion higher than the same time last year, this April's borrowing was the fourth highest for the start of the financial year since monthly records began more than 30 years ago.
'Receipts were up on last April, thanks partly to the higher rate of national insurance contributions.
'However, this was outweighed by greater spending, due to rising public services' running costs and increases in many benefits and state pensions.'
On Thursday, the ONS also revised down its borrowing figure for the latest fiscal year, to March 2025, by around £3.7 billion to £148.3 billion after receiving more information on tax receipts.
It was still around £11 billion above the forecast set by the Government's official forecaster, the Office for Budget Responsibility.
Chief secretary to the Treasury Darren Jones said: 'After years of economic instability crippling the public purse, we have taken the decisions to stabilise our public finances, which has helped deliver four interest rate cuts since August, cutting the cost of borrowing for businesses and working people.
'We're fixing the NHS, with three million more appointments to bring waiting lists down, rebuilding Britain with our landmark planning reforms and strengthening our borders, delivering on the priorities of the country through our plan for change.'