UK borrowing jumps as Reeves faces up to Iran war challenge
Record debt interest costs and higher welfare spending pushed borrowing above the Office for Budget Responsibility forecast.
- Government borrowing reached £24.3 billion in April, a 25% increase from last year that exceeded the Office for Budget Responsibility's £20.9 billion forecast.
- The Iran war has exacerbated fiscal pressures, pushing debt interest costs to a record £10.3 billion in April as rising inflation impacted index-linked gilts.
- While government receipts rose 2.9% in April, public spending increased 6.5%, leading Capital Economics deputy chief UK economist Ruth Gregory to warn of inevitable "deterioration in the public finances."
- Chancellor Rachel Reeves faces mounting pressure to balance day-to-day spending as political uncertainty regarding Prime Minster Sir Keir Starmer's leadership keeps borrowing costs elevated.
- Analysts warn the deficit could swell to 4.6% of GDP in the 12 months to March 2027, with Rob Wood of Pantheon Macroeconomics cautioning that tax hikes could "undermine growth and worsen the fiscal arithmetic.
16 Articles
16 Articles
Economy alert: UK borrowing costs surge to £24.3bn as Rachel Reeves faces 'financial strain'
UK borrowing costs surged to a higher-than-expected £24.3billion last month, according to the latest figures from the Office for National Statistics (ONS).This represents the second-highest April level on record for borrowing, as economists warn Chancellor Rachel Reeves has an uphill battle in improving the economy.Based on today's ONS figures, borrowing for April 2025 was a quarter higher, or £4.9 billion, than the year before.Notably, last mon…
Rachel Reeves sees borrowing spike as benefits spending offsets tax haul
Rachel Reeves oversaw a surge in borrowing in the first month of the financial year as April’s figures hit the highest since 2020 on higher benefit spend. Government borrowing – which marks the difference between total public sector spending and income – topped £24.3bn in April 2026, ...
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