The UK government experienced a significant increase in borrowing for the financial year ending in March, amounting to £151.9 billion, surpassing expectations by £14.6 billion. This rise is attributed to higher expenditures on pay and benefits amid rising inflation costs. Grant Fitzner, chief economist at the ONS, noted the historical context, indicating that debt levels are comparable to those in the early 1960s. In light of this, economists suggest impending spending cuts or tax increments may be necessary, as Chancellor Rachel Reeves approaches the Autumn Budget.
Despite a substantial boost in income, expenditure rose by more, largely due to inflation-related costs, including higher pay and benefit increases.
Reeves may not be too far away from having to raise money again in the Autumn Budget, by cutting spending and/or raising taxes, to meet her fiscal rules.
Darren Jones, chief secretary to the Treasury, said the government would 'never play fast and loose with the public finances'.
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