Is Britain heading for bankruptcy?
We can thank Rachel Reeves for one thing: setting up a real-world experiment to show the Laffer curve in action. April's figures for the public finances, like yesterday's figures for inflation, are truly dreadful. April should have been a bumper month for tax receipts, being the month that the rise in Employers' National Insurance Contributions (NICs) came into effect. Instead, borrowing surged to £20.2 billion in a single month. It took borrowing for the year 2024/25 to £18.3 billion, a smidgeon less that the Office for National Statistics (ONS) estimated last month but £11 billion higher than the Office for Budgetary Responsibility (OBR) had forecast.
Government receipts in April did advance by a fairly modest £5.6 billion compared with April 2024. However, this was outpaced by growth in spending, which was up £6.6 billion compared with April 2024, thanks to higher public sector wages and galloping benefits claims. Departmental spending in April was up £4.2
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