Public sector borrowing in the UK soared to £20.2 billion last month, significantly exceeding economists' forecasts and raising concerns ahead of Chancellor Rachel Reeves' forthcoming spending review. The surge in borrowing was driven by increased public services spending and welfare payments, causing the UK's debt-to-GDP ratio to rise to 95.5%. Furthermore, the budget deficit reached £70.3 billion, outpacing previous estimates. This situation complicates fiscal planning amidst politically sensitive decisions, especially following Labour's reversal on winter fuel allowances, increasing welfare costs ahead of budget announcements.
"April's borrowing was the fourth highest for the start of the financial year since monthly records began more than thirty years ago," said Rob Doody, deputy director for public finances at the ONS.
Doody noted that while tax receipts were buoyed by higher employer national insurance contributions, this was outstripped by increased spending on public sector wages, pensions, and benefits.
The overshoot comes at a politically sensitive time, with Reeves preparing to unveil departmental budgets for the next three years in the upcoming spending review.
Starmer told Parliament that Labour would now expand access to the benefit, which had been set for tightening under a previous fiscal decision.
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