UK government borrows more than expected in setback before budget
Rachel Reeves was urged to use next week’s budget to create significantly more headroom against her fiscal rules, after official figures showed the UK government borrowed almost £10bn more than forecast in the year to October.In the final snapshot of the public finances before the chancellor’s crunch budget, the Office for National Statistics (ONS) said borrowing – the difference between public spending and income – was £17.4bn last month.That was lower than the same month last year, but still the third-highest October deficit on record.In the fiscal year so far, borrowing was running at £116.
8bn, the ONS said – £9,9bn more than the independent Office for Budget Responsibility (OBR) expected the government would be borrowing at this point,It will publish new forecasts alongside the budget next week,Martin Beck, the chief economist at the consultancy WPI Strategy, said: “As things stand, total borrowing in 2025-26 could overshoot the OBR’s full-year forecast by around £10bn, pushing the deficit close to 5% of GDP,“Combined with policy U-turns, market movements, and a deteriorating productivity outlook, the chancellor’s headroom against her fiscal rules has almost certainly vanished.
”The bond markets are a key audience for next Wednesday’s budget, and will be paying close attention to how much “headroom” Reeves has left herself against her fiscal rules, at the end of the forecast period in five years’ time,Nick Ridpath, a research economist at the Institute for Fiscal Studies, said the fact the deficit was running so far ahead of OBR projections made as recently as March emphasised the need for a larger financial buffer,“Forecasts for the level of borrowing this year are subject to considerable uncertainty, never mind those for borrowing in four or five years’ time,” he said,“Operating with minimal fiscal margin for error is risky, and this is one reason why the chancellor might sensibly take steps to increase her so-called ‘fiscal headroom’ at next week’s budget,”Russell Shor, senior market analyst at trading platform Tradu.
com, said the size of the headroom would be a key test for government bonds, or gilts.“Gilt yields saw their biggest jump since July last Friday after reports that income-tax rises had been dropped, turning the budget into a crucial test of fiscal discipline, particularly whether Reeves can unlock roughly £20bn of headroom without unsettling sentiment,” he said.The ONS said central government spending was £3.7bn higher in October than a year ago – pointing to rising benefits payments because of higher-than-expected inflation, and pay increases for public servants.Reeves will deliver her second budget on Wednesday against a difficult political background, after the Treasury floated and then ditched plans to raise income tax.
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 promotionShe is still expected to raise taxes significantly, in response to a downgrade in economic forecasts from the OBR, and in order to increase the £10bn headroom against her fiscal rules.The chief secretary to the Treasury, James Murray, said the data underlined the importance of Reeves’s efforts to bring the public finances under control.“Currently we spend £1 in every £10 of taxpayer money on the interest of our national debt.That money should be going to our schools, hospitals, police and armed forces.That is why we are set to deliver the largest primary deficit reduction in both the G7 and G20 over the next five years – to get borrowing costs down,” he said.
The ONS said the government had to pay £8.4bn in debt interest in October – as payments on inflation-linked gilts, or government bonds, were larger than expected due to continued high inflation.Alongside tax rises, Reeves is also expected to deliver a package of cost of living measures in the budget, aimed at bringing inflation down.As a first step, she announced on Friday that prescription charges will be frozen for another year.Reeves’s first fiscal rule says she should try to bring the current budget into surplus by 2030 – so that day-to-day spending is matched by revenues.
The ONS said the deficit on this measure was £12,6bn in October, £2,6bn more than forecast by the OBR,The shadow chancellor, Mel Stride, said: “If Labour had any backbone, they would control spending to avoid tax rises next week,While Labour plan to spend more and more, Conservatives would cut the deficit and cut taxes with our golden economic rule and our £47bn savings plan.
”The worse-than-expected borrowing figures came as official retail sales data showed an unexpected 1.1% month-on-month decline in October, the first fall since May, with some analysts blaming consumer jitters before the budget.
Europe’s economy is geared towards a disappearing world, says ECB’s Lagarde
Europe’s economy is “geared towards a world that is gradually disappearing”, according to a warning from Christine Lagarde that the EU needs reforms to spur growth.The president of the European Central Bank (ECB) said the EU’s dependence on international trade had left it vulnerable, as major partners had turned away from the trade that made the bloc’s exporters wealthy.Donald Trump has led a global turn towards protectionism and against globalisation, with steep tariffs imposed on almost every trading partner. At the same time, China has used its dominance of production of certain critical materials and products to exert pressure.Lagarde argued that Europe was vulnerable because of a “dependency on third countries for our security and the supply of critical raw materials”
UK government borrows more than expected in setback before budget
Rachel Reeves was urged to use next week’s budget to create significantly more headroom against her fiscal rules, after official figures showed the UK government borrowed almost £10bn more than forecast in the year to October.In the final snapshot of the public finances before the chancellor’s crunch budget, the Office for National Statistics (ONS) said borrowing – the difference between public spending and income – was £17.4bn last month.That was lower than the same month last year, but still the third-highest October deficit on record.In the fiscal year so far, borrowing was running at £116
Wetherspoon to open first pub in Spain – offering garlic prawns and beer from 6am
Wetherspoon’s is to open its first pub outside the UK and Ireland, serving alcohol from 6am every day to sun-seeking Britons waiting for their plane in the departure lounge at Alicante airport.The opening in Spain, scheduled for January, will be the first foray on to continental European soil for the pub chain, which said it expects to pursue more footholds on the continent in the coming years.The expansion into mainland Europe comes nearly a decade after the outspoken Wetherspoon’s founder and chair, Tim Martin, celebrated Britain’s vote to leave the EU, a policy he vocally backed.The airport pub, named Castell de Santa Bàrbera after a culturally significant medieval coastal fortress in Alicante, expects to cater to holidaymakers travelling home from Spain’s Costa Blanca tourist hotspot.Alongside its usual dining fare, such as fry-ups, burgers and pizzas, the departure lounge pub will also serve traditional local dishes such as garlic prawns and Spanish omelette
Asos turns to AI stylists to win back shoppers after sales slide 12%
Asos has turned to online stylists powered by artificial intelligence as it attempts to win back customers and reverse a fall in sales.The online fashion retailer said sales had fallen 12% in the year to 31 August, and City analysts predicted another year of declining sales ahead.The company is testing “Styled for You”, which uses AI trained on its database of 100,000 curated outfits to suggest items that could go together with those a shopper has already bought or has searched.If a shopper signed up to its loyalty programme is seeking advice on buying a dress, for example, the AI stylist on the Asos app may suggest how the item can be complemented with a jacket and heels or given a more casual look with a sweater and trainers.The choices offered up are picked from Asos ranges based on consumer trends, and the shopper’s history and preferences are expressed when they sign up to its app
UK retail sales drop unexpectedly as shoppers await Black Friday and budget
Sales at UK retailers slumped unexpectedly last month as shoppers waited for Black Friday deals, and uncertainty over the upcoming budget dampened consumer confidence.Retail sales fell 1.1% month on month in October, the first fall since May, according to official figures from the Office for National Statistics (ONS). Economists had been expecting sales growth to be flat on the previous month.Supermarkets, clothing stores and online mail order companies suffered sales declines, which some retailers said was due to consumers delaying purchases in the run-up to the annual Black Friday sales, according to the ONS
AI bubble fears return as Wall Street falls back from short-lived rally
Fears of a growing bubble around the artificial intelligence frenzy resurfaced on Thursday as leading US stock markets fell, less than 24 hours after strong results from the chipmaker Nvidia sparked a rally.Wall Street initially rose after Nvidia, the world’s largest public company, reassured investors of strong demand for its advanced datacenter chips. But the relief dissipated, and technology stocks at the heart of the AI boom came under pressure.The benchmark S&P 500 closed down 1.6%, and the Dow Jones industrial average closed down 0
Seth Meyers on Epstein files: ‘It’s obvious why Trump fought so hard to stop this bill from passing’
My cultural awakening: I moved across the world after watching a Billy Connolly documentary
Jimmy Kimmel on Epstein files congressional vote: ‘Make no mistake – this isn’t over’
British Museum ends ‘deeply troubling’ sponsorship from Japanese tobacco firm
Why don’t Conservatives get credit for culture funding? | Letter
Jon Stewart on Trump’s Epstein files flip-flop: ‘This dude is flailing’