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The UK government recorded higher-than-expected borrowing in April, prompting renewed warnings from economists that Chancellor Rachel Reeves may be forced to raise taxes in her upcoming autumn statement.
Public sector net borrowing rose to £20.2bn last month, according to figures released on Thursday by the Office for National Statistics. That figure is £1bn higher than in April 2024, and the fourth-highest April borrowing since monthly records began in 1993.
The data signals a challenging start to the fiscal year for Reeves, whose fiscal strategy is anchored by two key rules: ensuring day-to-day spending is met through tax revenues rather than borrowing, and putting debt on a declining path as a share of national income by the end of this Parliament in 2029–30.
Ruth Gregory, deputy chief UK economist at Capital Economics, described the figures as a “poor start” that could make new tax rises “feel inevitable” later this year. “Slower growth in the coming months is likely to dampen tax receipts,” she added, highlighting the difficult balance Reeves faces between supporting the economy and stabilising public finances.
While tax receipts were more than £5bn higher year-on-year, buoyed by increased National Insurance contributions from employers, rising government expenditure outpaced the gains. The ONS cited inflation-linked increases to public sector wages, pensions and welfare benefits as primary contributors to the jump in spending.
The fiscal outlook has been further complicated by recent policy shifts. Prime Minister Sir Keir Starmer this week announced a partial U-turn on cuts to winter fuel payments for pensioners, adding another potential burden to the government’s spending commitments. Analysts have also pointed to looming pressures on defence budgets as geopolitical tensions persist.
The chancellor has previously insisted that the £40bn in tax increases introduced in the October 2024 Budget, the largest single-year tax rise since 1993, would be the final such measure during this Parliament. But several economists now believe that stance may not hold.
Criticism from opposition parties has intensified in light of the figures. Mel Stride, the Conservative shadow chancellor, accused Reeves of “maxing out the national credit card” by bending her own fiscal rules. Liberal Democrat Treasury spokesperson Daisy Cooper said “the warning lights must be flashing in the Treasury this morning”.
Despite the negative headline, the ONS revised down its estimate for borrowing in the 2024–25 financial year to £148.3bn, £3.7bn less than previously forecast. However, this remains £11bn above the figure predicted by the Office for Budget Responsibility, raising questions about the realism of official forecasts.
Chief Secretary to the Treasury Darren Jones said the government’s recent actions had helped cut interest rates, easing borrowing costs for both businesses and households. “We’ve taken tough decisions to stabilise the economy,” he said.
As Chancellor Reeves prepares for her second Budget this autumn, she faces the increasingly difficult task of maintaining investor confidence, delivering on social spending promises, and meeting her own fiscal targets, all under the looming shadow of fragile growth and rising costs
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