UK borrowing rises to £20.2bn, putting pressure on Rachel Reeves
The UK government borrowed more than expected in April, underscoring the challenge for Rachel Reeves to fix public services and grow the economy while meeting her fiscal rules,With the chancellor under pressure on Labour’s tax plans, the Office for National Statistics (ONS) said public sector net borrowing rose to £20,2bn in April, £1bn more than the same month a year earlier,City economists had forecast borrowing of £17,9bn.
The figure was the fourth-highest April for borrowing – the difference between public spending and income – on records dating back to 1993, surpassed only by deficits in April 2020 and 2021 during the height of the Covid pandemic, and in April 2012 linked to costs related to the privatisation of Royal Mail,In a snapshot covering the first month of the new financial year, the figures come after a rise in employer national insurance contributions (NICs) announced by Reeves in her autumn budget, which were enacted in April,Rob Doody, an ONS deputy director for public sector finances, said: “Receipts were up on last April, thanks partly to the higher rate of NICs,However, this was outweighed by greater spending, due to rising public services’ running costs and increases in many benefits and state pensions,”It comes as the chancellor has faced growing questions over her tight control of the public finances before next month’s comprehensive spending review, which is expected to outline departmental budgets until the end of the current parliament in 2029.
It emerged on Wednesday that Reeves was urged by the deputy prime minister, Angela Rayner, to consider a series of wealth taxes in last month’s spring statement to raise more revenue to avoid the need for deep cuts to welfare,The chancellor last month announced cuts to sickness and disability benefits and reductions in overall public spending to help rebuild £9,9bn of headroom against her main fiscal target,According to the latest snapshot, tax revenues were boosted by a £1,7bn rise in compulsory social security contributions, reflecting the rise in employer NICs.
Revenue from income tax, VAT, tobacco and stamp duties and corporation tax receipts also rose.However, spending outstripped higher tax revenues, as pay rises and inflation increased government running costs, while the state pension triple lock drove up welfare payments.Central government’s expenditure increased by £4.2bn on a year earlier to £93.3bn.
Mel Stride, the shadow chancellor, said: “Instead of reining in spending, the Labour chancellor has piled billions on to the national debt by fiddling the fiscal rules and maxing out the national credit card.”Darren Jones, the chief secretary to the Treasury, said the government had taken decisions to stabilise the public finances after “years of economic instability crippling the public purse” under the Conservatives.The previous government cut taxes despite rising borrowing levels, and had promised further reductions offset by cuts to welfare and public spending.Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotion“We’re fixing the NHS, with 3m more appointments to bring waiting lists down, rebuilding Britain with our landmark planning reforms and strengthening our borders, delivering on the priorities of the country through our plan for change,” Jones said.The figures come after Keir Starmer announced a part U-turn on cuts to winter fuel payments to pensioners amid pressure on his government after disappointing local election results.
After a backlash against the decision to means-test the benefit, the prime minister suggested that a stronger economy had helped to lift pressure on the public finances, enabling the decision,Handing some positive news to the chancellor, the ONS said it had revised down its borrowing estimate for the 2024-25 financial year by £3,7bn,Total borrowing was £137,3bn, £11bn higher than forecast by the Office for Budget Responsibility.
However, Reeves will face challenges to manage the public finances as the British economy is rattled by heightened uncertainty facing businesses amid Donald Trump’s increasingly erratic global trade war.The OBR has warned that the worst-case scenario could reduce UK GDP by as much as 1% and erase Reeves’s headroom.According to the latest snapshot, public sector net debt, the sum of every annual borrowing figure, was estimated at 95.5% of GDP, one of its highest levels since the 1960s.
UK private sector shrinking as firms cut jobs; pressure to raise taxes as government borrowing jumps – as it happened
Britain’s private sector is shrinking for the second month running as factory output falls at the fastest rate in a year and a half, a new survey shows.The latest poll of purchasing managers at UK companies found that private sector output is decreasing in May, although at a slower rate than in April.Manufacturing production fell at the fastest rate since October 2023, although this was moderated by a “fractional rise” in service sector output.UK firms reported that clients were cautious this month, due to business uncertainty, leading to a drop in new orders. However, worries about US tariffs have dropped this month, after Donald Trump delayed tariffs on America’s trading partners and agreed a trade deal with the UK
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Scattered Spider is focus of NCA inquiry into cyber-attacks against UK retailers
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England v Zimbabwe: men’s cricket Test, day one – live
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Scientists rubbish Enhanced Games’ claims that doping causes no harm
Enhanced Games competitors run the risk of their libido being “killed off” as well as a greater chance of heart attacks and psychiatric issues by taking performance enhanced drugs, leading experts have warned.Prof Ian Broadley, whose research has been supported by the World Anti-Doping Agency, and his colleague Martin Chandler, a research fellow who specialises in PEDs, also told the Guardian that organisers’ claims that banned drugs can be made safer if taken under medical supervision are “incorrect and misleading”.Organisers of the Enhanced Games revealed on Wednesday that they will stage a four-day event in Las Vegas next year, but confirmed that they had already given the Greek swimmer Kristian Gkolomeev $1m for dipping under the 50 metre freestyle world record time by using banned drugs.Meanwhile the Australian former Olympic swimmer, James Magnussen, has said that he “feels like 18 again” after taking testosterone, peptides and banned drugs, including BPC-157, CJC-1295 and the growth hormone ipamorelin to prepare for the event.However, Boardley and Chandler have warned that Magnussen and other Enhanced Games competitors are underestimating the risks and dangers from taking steroids and other experimental drugs
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