- September borrowing hit £20.2 billion – only during the Covid-19 pandemic in 2020 was borrowing for the month higher
- Cash coming in through taxes increased by £6.8 billion, with national insurance changes playing a substantial role
- Debt interest and increased wage and benefit costs pile pressure on the chancellor ahead of November’s Budget
Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK public sector finances:
“This set of government borrowing figures lays bare the tough job Rachel Reeves faces to try and balance the country’s books.
“The chancellor has hiked taxes on employers, announced infrastructure investments and planning reforms, and today promises to cut red tape for businesses. But all those tax-raising, growth-inducing measures haven’t been able to offset the weight piling up on the other end of the seesaw.
“Inflation has insidiously woven its tentacles deep into the Treasury’s coffers, ratcheting up interest on the huge debt pile that’s mushroomed since 2020, inflating the cost of benefits and creating an economic backdrop where pay rises were inevitable. The chancellor will likely also have to contend with an expected downgrade to productivity forecasts from the OBR – a measure that had previously been pinpointed as a palatable solution to a decades-long problem.
“Questions remain over how to stimulate growth, make consumers feel confident enough to spend their cash and convince businesses that now is the time to take their foot off the brakes and invest. There are green shoots, with the economy resilient if uninspiring despite external factors like tariffs and geopolitical tensions, but many of the changes already implemented or under consideration are admirably long term.
“Today’s world demands instant gratification and finding a magic money tree is a plot twist normally reserved for fairytales. In the real world this Budget is likely to be dry, difficult and divisive.”
