Borrowing surges by more than forecast in blow to Chancellor

Chancellor Rachel Reeves is facing further pressure over Britain’s public finances after official figures showed a bigger-than-expected surge in government borrowing last month to nearly £18 billion.

The Office for National Statistics (ONS) said public sector net borrowing stood at £17.8 billion last month – the third highest for any December on record.

Borrowing was £10.1 billion higher than the same month last year and more than the £14.1 billion expected by most economists.

Public sector net borrowing excluding public sector banks was £17.8 billion in December 2024, £10.1 billion more than in December 2023 and the highest December borrowing for four years.

➡️ https://t.co/7wMDarF2nu pic.twitter.com/4oJsXpNev0

— Office for National Statistics (ONS) (@ONS) January 22, 2025

The ONS said the figure was driven higher largely by soaring debt interest payments, which rose £3.8 billion year on year due to higher Retail Prices Index inflation.

Borrowing in the financial year so far is £129.9 billion, £8.9 billion more than the same period a year earlier and the second-highest financial year-to-December borrowing since monthly records began – only outstripped by the mammoth borrowing seen at the height of the pandemic in 2020.

Borrowing in the year to date is £4.1 billion more than the £125.9 billion forecast by the independent fiscal watchdog, the Office for Budget Responsibility (OBR).

Public sector net financial liabilities excluding public sector banks were 84.5% of GDP at the end of December 2024; this was 1.9 percentage points more than at the end of December 2023, and 12.7 percentage points lower than public sector net debt. pic.twitter.com/71RkCxdy2K

— Office for National Statistics (ONS) (@ONS) January 22, 2025

It comes after volatility in the UK government bond market at the start of the year, which sent public sector borrowing costs soaring, and led to fears that Ms Reeves is on track to miss her fiscal rules.

Treasury chief secretary Darren Jones said: “Economic stability is vital for our number one mission of delivering growth. That’s why our fiscal rules are non-negotiable and why we will have an iron grip on the public finances.

“Through our spending review, we will interrogate every line of government spending for the first time in 17 years.”