Cliff Notes
- Government borrowing reached its highest level in five years last month, with an £18bn deficit, exceeding economists’ predictions by £5.25bn.
- While tax and national insurance receipts increased, they were overshadowed by rising expenditures on public services, benefits, and debt interest payments.
- Chancellor Rachel Reeves faces heightened fiscal challenges as she approaches her November budget, aiming to reduce government debt and balance the budget by 2030.
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By Sarah Taaffe-Maguire, business and economics reporter
Government borrowing last month was the highest in five years, official figures show, exacerbating the challenge facing Chancellor Rachel Reeves
Not since 2020, in the early days of the COVID-19 pandemic with the furlough scheme ongoing, was the August borrowing figure so high, according to data from the Office for National Statistics (ONS).
Tax and national insurance receipts were “noticeably” higher than last year, but those rises were offset by higher spending on public services, benefits and interest payments on debt, the ONS said.
It meant there was an £18bn gap between government spending and income, a figure £5.25bn higher than expected by economists polled by Reuters.
It compounds the problem for Ms Reeves as she approaches the November budget.
Her self-imposed fiscal rules say she must bring down government debt and balance the budget by 2030.
Responding to the figures, Ms Reeves’s deputy, chief secretary to the Treasury, James Murray, said: “This government has a plan to bring down borrowing because taxpayer money should be spent on the country’s priorities, not on debt interest.
“Our focus is on economic stability, fiscal responsibility, ripping up needless red tape, tearing out waste from our public services, driving forward reforms, and putting more money in working people’s pockets.”