UK Government Borrowing Reaches Five-Year High Ahead of Budget

The UK government’s borrowing has reached a five-year high, according to official data released on Tuesday. The public deficit between April and September stood at £99.8 billion ($133.6 billion), as reported by the Office for National Statistics (ONS). This figure represents the highest borrowing for the six-month period since the Covid pandemic began and the second-highest since records commenced in 1993.

In September, the deficit, which is the difference between public spending and tax revenue, was £20.2 billion, marking a £1.6 billion increase from the same period last year. The UK government, led by Prime Minister Keir Starmer, is facing pressure to address public finances without hindering the country’s already sluggish economic growth. To balance the books, Finance Minister Rachel Reeves is expected to announce tax hikes in the upcoming budget at the end of November.

Reeves had previously increased certain levies in her inaugural budget last October, a move that experts argue has contributed to the UK’s lackluster economic growth. Additionally, Britain is grappling with elevated inflation, which has driven up debt interest payments due to the rising cost of servicing inflation-linked bonds.

The surge in borrowing has sparked concerns among analysts, with some warning of a “debt doom loop” where the government is borrowing more to fund previous borrowing. The UK’s worsening deficit has significant implications for the country’s economic stability and growth prospects. As the government prepares to unveil its annual budget, it will need to strike a delicate balance between addressing public finances and supporting economic growth. The upcoming budget is expected to provide more clarity on the government’s plans to tackle the deficit and stimulate economic growth.