Britain is facing an economic shock stemming from Donald Trump’s trade wars, resulting in government borrowing overshooting official estimates by nearly £15 billion. In the financial year ending in March, borrowing was reported at £151.9 billion, exceeding the previous year by over £20 billion. Economists caution that Chancellor Rachel Reeves may need to raise taxes or implement deeper public spending cuts to adhere to her fiscal targets. The situation is compounded by rising government debt interest payments, as investors grow concerned about the global economic impact of U.S. tariff policies.
The rise in borrowing to £151.9bn indicates that the UK government may need to raise taxes or cut public spending to meet fiscal targets.
Ruth Gregory stated that borrowing was already overshooting forecasts prior to the trade tariff impact, increasing the need for potential tax hikes.
The OBR warned that the trade wars could shrink UK GDP by 1%, jeopardizing the fiscal space that Rachel Reeves has created.
Government debt interest payments have surged since November's election, reflecting increased borrowing costs amid concerns over Trump's tariff policies.
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