- UK government borrowing in the year to March 2025 overshoots most recent OBR forecast to the tune of £14.6 billion
- Borrowing in the month of March came in £2.8 billion higher than the same period in 2024 – at £16.4 billion it was the third highest for March since records began
- Borrowing for the month was only higher during Covid in March 2021 and during the energy crisis in March 2023
Danni Hewson, AJ Bell head of financial analysis, comments on the latest public sector finances:
“It might seem like a lifetime ago since Rachel Reeves’ Spring Statement accompanied by a new OBR forecast, but in reality, it was less than a month ago.
“A lot has happened in those few weeks with markets wobbling, trade wars undermining investment decisions and growth forecasts globally being downgraded.
“And that lowering of growth expectation must be a big concern for the UK government which was elected on the promise that it would deliver growth in order to make our financial situation better.
“Because in those few weeks the sums have changed. Looking back over the full year, the government borrowed significantly more than the OBR had expected when it updated its economic and fiscal outlook for March.
“Drilling down into the most recent month, borrowing in March came in at the third highest level for the month since records began. Only at the height of the energy crisis when households were being cushioned from the worst impacts and during the pandemic furlough scheme was borrowing higher.
“More money is being spent on goods and services as sticky inflation and the impact of public sector pay increases trickles along with elevated benefit payments.
“The cost of servicing debt rose to £4.3 billion for the month of March as global events pushed up borrowing costs. That’s the highest interest paid out in the month since records began back in 1997.
“Though the tax take was up over the month by £2.5 billion more than the previous March, it wasn’t enough to balance the books.
“Many of the challenges facing the UK economy are beyond the chancellor’s control and she is currently in Washington trying to strike a deal with the US administration on tariffs that will cushion the UK without selling off the family silver.
“One of the big questions is how those changes to employer National Insurance will impact next month’s numbers, especially with inflation linked benefits and the state pension rising at the same time.
“Many people will now be eyeing that headroom created back in March which had always seemed rather insubstantial, and wondering how much will be left by the autumn.”
