BRITAIN's borrowing has surged past the official forecasts that underpin the government's tax and spending plans, compounding the challenge facing chancellor Rachel Reeves in her November budget.
Public sector borrowing between April and August totalled £83.8 billion ($113.39), £11.4bn more than forecast by the Office for Budget Responsibility earlier this year, official data published on Friday (19) showed.
The borrowing was the highest for the first five months of the financial year since 2020 when the coronavirus pandemic forced the government into huge spending to prop up the economy.
Even before Friday's figures, Reeves had been expected to announce fresh tax increases in her budget on November 26 to stay on track to meet her fiscal rules and avoid unsettling financial markets.
Sterling fell by almost half a cent against the US dollar after the ONS released the borrowing figures along with separate data that showed a stronger-than-expected increase in retail sales volumes in August.
In August alone, the government borrowed almost £18bn, the Office for National Statistics said, much higher than the OBR estimate of a £12.5bn overshoot.
A Reuters poll of economists showed a median forecast of a £12.75bn deficit in August.
"Last month’s borrowing was the highest August total since the pandemic," ONS chief economist Grant Fitzner said. "Although overall tax and National Insurance receipts were noticeably up on last year, these increases were outstripped by higher spending on public services, benefits and debt interest."
The ONS said its estimates for borrowing in recent months had been revised higher by almost £6bn after updated data from the tax office showed value-added tax receipts were lower than initially thought.
Updated figures from local and devolved administrations also contributed to the revision.
Prior to Friday's data release, public sector borrowing had been tracking close to the OBR's forecast for the year to date.
(Reuters)
