Latest news with #borrowing
Daily Mail
7 hours ago
- Business
- Daily Mail
STEPHEN GLOVER: The pensions 'triple lock' must end. It pains me to say it, but Britain is no longer a rich nation and we can't afford it
When will Labour wake up to the fact that this country is living way beyond its means? Until it does, the rest of us will continue to inhabit a fool's paradise. Last month alone the Government borrowed nearly £21 billion – far more than most analysts expected and £6.6 billion more than in June last year. It is all but certain that taxes, already at a peacetime high, will go up again, and significantly, in October's Budget.
The Independent
9 hours ago
- Business
- The Independent
Mortgage brokers ‘seeing rise in amount of lending agreed for their clients'
Nearly four-fifths of mortgage brokers are noticing a rise in the amount of lending agreed for their clients, according to a survey. HSBC UK's mortgage broker barometer, which gathered sentiment from more than 1,100 mortgage brokers in July 2025, found 78% had seen an increase in the amount of lending agreed. Many lenders have recently made changes allowing some homeowners to borrow more, following clarification from the Financial Conduct Authority (FCA). Following changes to its own stress rates, HSBC UK estimated the average mortgage offer for first-time buyers will be £39,000 higher than would previously be offered. Nine in 10 (93%) brokers surveyed said that it is important for their clients to increase their borrowing power. Nearly two-thirds (63%) of brokers have said they are seeing clients take proactive steps to improve their credit score. The same proportion (63%) expect mortgage applications to increase over the next six months. Confidence on buy-to-let (BTL) mortgages is more muted, the report indicated, with the majority of brokers expecting BTL applications to remain at the current level. Nearly nine in 10 (87%) brokers surveyed predict that the Bank of England base rate will be reduced over the course of the year. Chris Pearson, head of intermediary mortgages at HSBC UK, said: 'The recent adjustments to stress rates by lenders are clearly making a positive and tangible impact. 'This broker barometer shows that almost eight in 10 brokers are seeing an uptick in the amount of lending agreed for their clients. This is a crucial development as it directly translates into enhanced buying power and greater accessibility for aspiring homeowners, reflecting a more responsive market.'
Daily Mail
10 hours ago
- Business
- Daily Mail
Britain is drowning in debt as UK borrowing soars and pressure grows for major tax hikes
Britain is drowning in debt with borrowing jumping to a five-year high, the latest figures reveal. Rachel Reeves will now face intensifying pressure to put up taxes to deal with the spiralling cost of servicing the debt pile. Borrowing, which makes up the shortfall between the Government's income through tax and the amount it spends, climbed last month to a larger than expected £20.7billion. That was the highest level for June since 2020 and £6.6billion more than a year ago. The surge was fuelled by a sharp increase in debt interest payments, up from £8.4billion to £16.4billion. The figures highlight the staggering cost of servicing the UK's debt mountain, which now stands at a towering £2.87trillion. Debt interest payments are expected to surpass £110billion this financial year. The Chancellor told a House of Lords committee hearing yesterday that the UK was 'still very reliant on the goodwill of strangers' who finance Britain's debt by buying government bonds. She added: 'I'm a Labour politician. I don't think there's anything progressive about spending £100billion a year, often to US hedge funds, when I would rather spend that money on the health service or on defence or on better schools.' Ms Reeves said that meant she would stick to her fiscal rules, which require the Government to balance the books on day-to-day spending and target an eventual reduction in debt. Failure to do so could mean bond investors demand even higher rates to lend to the UK. Yields have already risen since Labour came to power a year ago. Higher inflation also contributes to raise debt interest costs. Bank of England governor Andrew Bailey told MPs in a separate parliamentary hearing that he was 'not unconcerned' by the rising cost of borrowing. The dire financial situation will add up to tough decisions in Ms Reeves' autumn Budget, when she could face filling in a financial black hole of more than £20billion in order to meet her fiscal rules. Her predicament has been worsened after the Government caved in over welfare reforms that could have saved £5billion a year. Tom Clougherty, from think-tank the Institute of Economic Affairs, said the borrowing figures meant tax rises were 'inevitable'. 'Given the country's deepening economic malaise, high borrowing costs, and the Government's failure to implement even minor spending cuts, it is hard to see another way out,' he added. Speculation is rife the Chancellor will raise money through measures such as freezing income tax thresholds – dragging millions into paying tax at higher rates – or raiding pension savings. Some suggest Ms Reeves could even abandon election pledges not to increase income tax, employee National Insurance or VAT. Another option could be a hike on business taxes but that would bitterly dismay firms still reeling from the Chancellor's £25billion hike in employer National Insurance contributions. The employer NI hike, which took effect in April, has delivered an extra £7.5billion to Treasury coffers so far this year. Hated inheritance tax has also brought in £2.2billion, up by more than £100million since last year. Shadow Chancellor Sir Mel Stride said: 'Rachel Reeves is spending money she doesn't have. Make no mistake, working families will pay the price for Labour's failure and costly U-turns.' The borrowing fears add to the darkening economic picture under Labour after unemployment rose, GDP shrank for two months in a row and inflation hit 3.6 per cent, the highest level since the start of last year. And it comes after the Office for Budget Responsibility raised fears over the state of the public finances, saying Britain 'cannot afford the array of promises that it has made to the public'. Ms Reeves would not commit to lowering taxes but said she wanted to reduce the tax burden by increasing GDP. Appearing before the House of Lords economic affairs committee, she again refused to rule out a wealth tax, saying tax is 'a matter for the Budget'. But she called on employers to hire British workers, saying: 'I do not think that businesses should always resort to the immigration lever to fill vacancies.'
Telegraph
17 hours ago
- Business
- Telegraph
Debt-addicted Britain needs a dose of shock therapy
Britain is increasingly living like a junkie, struggling just to cover the interest on his tick. Debt is our drug, and the dealers want paying. Figures released on Tuesday by the Office for National Statistics show we borrowed nearly £21bn in June alone. That's despite tax revenues rising by almost £6bn compared with the same month last year – thanks to fiscal drag boosting income tax by £1bn, and the Chancellor's National Insurance raid adding over £3bn more. The habit is proving impossible to kick. State spending has ballooned, and the cost of servicing our debt addiction has soared. In June, debt interest hit £16.4bn, nearly double what it was a year ago and the second-highest monthly bill on record. We now spend more feeding our debt in a single month than we do policing our borders in an entire year. Things are worse now because of how we've structured our debt, how we got hooked. One of our main suppliers of the debt drug was Andrew Bailey and his Bank of England who kept us dosed up on cheap borrowing long after it was clear that interest rates would have to rise. The hundreds of billions printed during the Bank's QE programme, along with interest rates held too low for too long, maxed the risks and emboldened the Treasury to binge. Rather than lock in long-term deals while rates were rock-bottom, we chased short-term fixes. And we wanted a bargain. To lure bond markets, we promised inflation-proof debt – index-linked gilts – in exchange for lower upfront costs. It only worked so long as inflation stayed low. It didn't.
Yahoo
17 hours ago
- Business
- Yahoo
UK's rising debt cost puts Reeves and tax rises in spotlight
The UK government borrowed more than expected in June as debt interest payments jumped, piling further pressure on chancellor Rachel Reeves. Figures from the Office for National Statistics (ONS) showed that public sector net borrowing reached £20.7bn in June — £3.5bn higher than the £17.1bn forecast by the Office for Budget Responsibility (OBR), and £6.6bn above the same month in 2024. This was the second highest borrowing figure since monthly records began in 1993, after that of June 2020 during the COVID-19 pandemic. The ONS said that the public sector had spent more than it received in taxes and other income so far in this financial year. Provisional estimates showed it borrowed £57.8bn over this three month period, which was £7.5bn more than the same period last year, but was in line with the latest OBR forecast. The UK statistics authority said the current budget deficit was £44.5bn in this period, which was £6.5bn more than the same three months in 2024 and was the highest since 2021. Richard Heys, acting chief economist for the ONS, said: "The rising cost of providing public services and a large rise this month in interest payable on index-linked gilts pushed up the overall spending more than the increases in income from taxes and national insurance (NI) contributions, causing borrowing to rise in June." Central government receipts rose by £5.7bn year-on-year to £86.8bn in June, boosted by a £1bn increase in income tax, £700m more in value added tax (VAT) and £500m in corporation tax receipts. An increase in employer NI contributions contributed to a £3.1bn rise in compulsory social contributions, bringing that total to £17.4bn. However, provisionally estimates showed that government spending rose to £97.1bn in June, up by £12.4bn compared to the same month last year. An £8.4bn increase in government debt interest payable to £16.4bn was among the key drivers, along with rises in departmental spending and net social benefits. Alex Kerr, UK economist at Capital Economics, said "total government expenditure came in £2.2bn above the OBR's forecast. That was due to hotter-than-expected retail prices index (RPI) inflation in Q2 pushing up debt interest payments to £16.4bn, £2.4bn above the OBR's forecast and to the second highest June total since monthly records [on government interest payments] began in 1997." Read more: London IPO fundraising slumps in blow to UK The latest borrowing figures leaves the UK's net debt at 96.3% of gross domestic product (GDP), 0.5 percentage points higher than a year ago and among the highest levels recorded since the early 1960s. Kerr said: "The government's U-turns on spending cuts and potential upward revisions to the OBR's borrowing forecasts means the chancellor will probably need to raise £15-25bn at the autumn budget to maintain the £9.9bn of headroom against her fiscal mandate. "And given that she is struggling to stick to existing spending plans and we doubt the gilt market will tolerate significant increases in borrowing, she will probably have to raise taxes instead." Professor Joe Nellis, economic adviser at accountancy and advisory firm MHA, said: "What we are very likely to see at the [autumn] budget is another set of tax rises. The freeze on income tax brackets will continue, effectively acting as a stealth tax on workers jumping tax brackets through inflation-level rather than real-terms pay rises. "How else the chancellor raises funds is unclear, especially if she is to maintain her fiscal rules and the pre-election promise to not raise taxes on 'working people', although we have already seen a loosening of the meaning of that term." Read more: Stocks to watch this week: Tesla, Alphabet, Intel, Lloyds and JD Wetherspoon How to build passive income Jobs data increases odds on Bank of England interest rate cut
