Britain’s Debt Increases Amid Heightened Strain on Rachel Reeves, Fiscally Impacted by £17.7 Billion Increase in Borrowing | Finances of the Government

Higher tax revenues could not prevent an increase in public sector borrowing in May to £17.7bn, up from £17bn a year earlier and the second-highest for that month on record. City economists had forecasted a public sector net borrowing of £17.1bn. The figures indicate that the government is facing difficulties in reducing the annual deficit to meet strict spending rules. Despite the October budget allocating over £100bn for additional investment spending, Chancellor Rachel Reeves stated that day-to-day Whitehall budgets must remain within strict limits. However, the current budget deficit was below the Office for Budget Responsibility’s forecast. Reeves has introduced extra taxes on businesses, implemented in April. The OBR expected the current deficit to be £13bn in May, but it was £12.8bn, marking the second consecutive month when the deficit fell below the OBR prediction. Labour MPs are expected to rebel against benefit cuts worth over £5bn in the welfare bill introduced to parliament. Major economic forecasters have downgraded the UK’s growth prospects, potentially leading to further spending cuts or tax increases. The OBR projected a decrease in borrowing from £152bn in 2024-25 to £117.7bn in the 2025-26 financial year. The following month’s deficit came in at £20.2bn, higher than the same month a year earlier and economists’ predictions.

Source: https://www.theguardian.com/business/2025/jun/20/uk-borrowing-rises-adding-to-pressure-on-rachel-reeves