Latest news with #UKborrowing
The Independent
22-05-2025
- Business
- The Independent
Tax rises ‘feel inevitable' after jump in Government borrowing
Tax increases from the Chancellor later this year 'feel inevitable', economists have said after UK Government borrowing jumped last month. The Office for National Statistics (ONS) said public sector net borrowing rose to £20.2 billion, its fourth-highest April figure on record, mounting further pressure on Chancellor Rachel Reeves to meet her fiscal rules. The state borrowing figure reflects the difference between Government spending and its income, largely through tax receipts. The latest figure showed that the Chancellor had to borrow more money than expected over the month, surpassing analyst predictions of £17.6 billion. It comes as Rachel Reeves seeks to meet her fiscal rule of balancing day-to-day spending with revenues by 2029-30, while improving public services and targeting accelerated economic growth. Economists have said the increased deficit, plans to increase defence spending and the U-turn on winter fuel payments could indicate future tax rises are needed to balance the state finances in the longer term. Ruth Gregory, deputy chief UK economist at Capital Economics, said: 'April's public finances figures showed that despite the boost from the rise in employers' national insurance (NI) contributions, the fiscal year got off to a poor start. 'With the PM announcing a partial U-turn on the cut to winter fuel payments, the dilemma faced by the Chancellor over how to deal with increased spending pressures in an environment of low economic growth and high interest rates hasn't gone away. 'With the markets seemingly uneasy about more public borrowing, further tax rises are starting to feel inevitable.' Matt Swannell, chief economic adviser to the EY Item Club, said higher borrowing and pressure from US tariff plans on economic growth could 'more than eliminate the slim headroom' against the rules. He said: 'A potential reversal of winter fuel payment cuts and the likelihood that defence spending will need to rise again will make the fiscal arithmetic even more challenging and increase the pressure to generate more revenue through tax rises.' The rise in borrowing was largely linked to increases in public sector pay, national insurance payments and higher benefits and state pensions. Central government departmental spending on goods and services rose by £4.2 billion year-on-year to £37.9 billion thanks to April pay increases and cost inflation. 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% 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. The 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.'
Yahoo
22-05-2025
- Business
- Yahoo
FTSE 100 LIVE: Stock fall as UK government borrowing jumps to £20.2bn in April
The FTSE 100 (^FTSE) and European stocks were lower on Thursday as traders digested the latest UK borrowing figures for April. According to the Office for National Statistics, UK government borrowing rose to £20.2bn during the month — £1bn more than the previous year, and the fourth-highest April borrowing since monthly records began in 1993. This was also up from £16.4bn in March. In a blow to chancellor Rachel Reeves, city economists had forecast a deficit of around £18bn. ONS deputy director for public sector finances Rob Doody said: '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.' London's benchmark index (^FTSE) was 0.6% down in early trade. Germany's DAX (^GDAXI) dipped 0.8% and the CAC (^FCHI) in Paris also headed 0.8% into the red. The pan-European STOXX 600 (^STOXX) slipped 0.8%. Wall Street is set for a positive start as S&P 500 futures (ES=F), Dow futures (YM=F) and Nasdaq futures (NQ=F) were all in the green. The pound was 0.1% up against the US dollar (GBPUSD=X) at 1.3433. Stocks: Create your watchlist and portfolio Follow along for live updates throughout the day: The three major US stock indexes were down more than 1% each yesterday following a poor performing auction for US government bonds. The dollar also fell broadly. Treasury yields extended their gains after the US Treasury Department saw soft demand for the $16bn sale of 20-year bonds. The weak bond sale reinforced the view that investors are shying away from US assets. The yield on benchmark 10-year US Treasury notes rose to 4.605% from 4.511% a day earlier. At the same time, concerns continued about US president Donald Trump's efforts to push through a tax-cutting bill that could worsen the debt load by $3tn to $5tn. Overall, the Dow Jones Industrial Average (^DJI) fell 1.91%, to 41,860.01, the S&P 500 (^GSPC) fell 1.6%, to 5,844.55, and the Nasdaq Composite (^IXIC) fell 1.4%, to 18,872.64. Good morning, and welcome back to our markets live blog. As usual we will be taking a deep dive into what's moving markets and happening across the global economy. Here's a quick look at what's on the agenda for today: 7am: Trading updates: BT, British Land, QinetiQ, Bloomsbury Publishing, Tate & Lyle, Investec, easyJet, Intertek, ConvaTec, Hill & Smith 7am: UK public finances for April 9am: Eurozone 'flash' PMI report for May 9am: IFO survey of eurozone business confidence 9.30am: UK 'flash' PMI report for May 11am: CBI industrial trends 1.30pm: US weekly jobless claimsThe three major US stock indexes were down more than 1% each yesterday following a poor performing auction for US government bonds. The dollar also fell broadly. Treasury yields extended their gains after the US Treasury Department saw soft demand for the $16bn sale of 20-year bonds. The weak bond sale reinforced the view that investors are shying away from US assets. The yield on benchmark 10-year US Treasury notes rose to 4.605% from 4.511% a day earlier. At the same time, concerns continued about US president Donald Trump's efforts to push through a tax-cutting bill that could worsen the debt load by $3tn to $5tn. Overall, the Dow Jones Industrial Average (^DJI) fell 1.91%, to 41,860.01, the S&P 500 (^GSPC) fell 1.6%, to 5,844.55, and the Nasdaq Composite (^IXIC) fell 1.4%, to 18,872.64. Good morning, and welcome back to our markets live blog. As usual we will be taking a deep dive into what's moving markets and happening across the global economy. Here's a quick look at what's on the agenda for today: 7am: Trading updates: BT, British Land, QinetiQ, Bloomsbury Publishing, Tate & Lyle, Investec, easyJet, Intertek, ConvaTec, Hill & Smith 7am: UK public finances for April 9am: Eurozone 'flash' PMI report for May 9am: IFO survey of eurozone business confidence 9.30am: UK 'flash' PMI report for May 11am: CBI industrial trends 1.30pm: US weekly jobless claims
The Guardian
22-05-2025
- Business
- The Guardian
UK government borrowing jumps to £20.2bn in April
Update: Date: Title: Introduction: UK borrowing rises to £20.2bn in April Content: Good morning, and welcome to our rolling coverage of business, the financial markets and the eurozone. It's a new financial year, but the same old story for the UK government, as borrowing rises faster than expected. The latest public finance figures, just released, show that the UK borrowed £20.2bn in April. That's £1bn more than in April 2024 and the fourth-highest April borrowing since monthly records began in 1993. City economists had forecast a deficit of around £18bn, so the new financial year has not gott off to a great start for Rachel Reeves, at a time when the chancellor is under pressure to raise taxes to avoid cuts to welfare payments. The public finances report shows that central government's current receipts rose by £5.1bn year-on-year, due to increased tax receipts – including £1.7 billion in Income Tax, £500m in Value Added Tax (VAT), £500m in tobacco duty, £400m in stamp duty (on land and property), and £200m in Corporation Tax receipts. However, spending rose too – central government's current expenditure increased by £4.2bn, as pay rises and inflation pushed up the cost of goods and services, and some benefits increased in line with inflation. ONS deputy director for public sector finances Rob Doody says: '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.' Happily, though, the interest payable on central government debt fell by £500m to £9.0bn, due to lower payments on inflation-linked bonds. 7am BST: UK public finances for April 9am BST: Eurozone 'flash' PMI report for May 9am BST: IFO survey of eurozone business confidence 9.30am BST: UK 'flash' PMI report for May 11am BST: CBI industrial trends 1.30pm BST: US weekly jobless claims 1.30pm Update: Date: 2025-05-22T06:32:38.000Z Title: It's not all bad news for Rachel Reeves, though. Content: The Office for National Statistics has revised down its estimate for borrowing in the last financial year, to £148.3bn. That's £3.7bn less than the initial estimate, but still £11bn more than had been forecast by the Office for Budget Responsibility (OBR). Update: Date: 2025-05-22T06:31:07.000Z Title: Analyst: More tax rises may be needed Content: Today's borrowing figures are 'disappointing', and highlight the Chancellor's lack of wiggle room, says Ruth Gregory, deputy chief UK economist at Capital Economics. Gregory told clients: April's public finances figures showed that despite the boost from the rise in employers' National Insurance Contributions (NICs), the fiscal year got off to a poor start. This raises the chances that if the Chancellor wishes to stick to her fiscal rules, more tax hikes in the Autumn Budget will be required. Update: Date: 2025-05-22T06:26:37.000Z Title: Chart: UK public finances in April Content: Here's a chart showing the details of today's public finances: This article includes content hosted on We ask for your permission before anything is loaded, as the provider may be using cookies and other technologies. To view this content, click 'Allow and continue'. Update: Date: 2025-05-22T06:25:02.000Z Title: Introduction: UK borrowing rises to £20.2bn in April Content: Good morning, and welcome to our rolling coverage of business, the financial markets and the eurozone. It's a new financial year, but the same old story for the UK government, as borrowing rises faster than expected. The latest public finance figures, just released, show that the UK borrowed £20.2bn in April. That's £1bn more than in April 2024 and the fourth-highest April borrowing since monthly records began in 1993. City economists had forecast a deficit of around £18bn, so the new financial year has not gott off to a great start for Rachel Reeves, at a time when the chancellor is under pressure to raise taxes to avoid cuts to welfare payments. The public finances report shows that central government's current receipts rose by £5.1bn year-on-year, due to increased tax receipts – including £1.7 billion in Income Tax, £500m in Value Added Tax (VAT), £500m in tobacco duty, £400m in stamp duty (on land and property), and £200m in Corporation Tax receipts. However, spending rose too – central government's current expenditure increased by £4.2bn, as pay rises and inflation pushed up the cost of goods and services, and some benefits increased in line with inflation. ONS deputy director for public sector finances Rob Doody says: '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.' Happily, though, the interest payable on central government debt fell by £500m to £9.0bn, due to lower payments on inflation-linked bonds. 7am BST: UK public finances for April 9am BST: Eurozone 'flash' PMI report for May 9am BST: IFO survey of eurozone business confidence 9.30am BST: UK 'flash' PMI report for May 11am BST: CBI industrial trends 1.30pm BST: US weekly jobless claims 1.30pm
Bloomberg
22-05-2025
- Business
- Bloomberg
UK Budget Deficit Exceeds Forecasts Despite Employer Tax Hike
UK government borrowing posted a surprise increase in the first month of the new fiscal year, providing Chancellor of the Exchequer Rachel Reeves little relief from the difficult budget backdrop she has faced since taking office. The deficit in April was £20.2 billion ($27.1 billion), the Office for National Statistics said Thursday. The shortfall was £1 billion higher than a year earlier and well above the £17.9 billion median forecast of economists surveyed by Bloomberg. The Office for Budget Responsibility, the fiscal watchdog, will publish its monthly profile for 2025-26 later today.
