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The United Kingdom Government borrowing excessive expectations in February, according to official figures, underlining pressure on Chancellor Rachel Reeves as it prepares for its spring statement next week.
The absence between government revenues and spending was 10.7BN for last month, the Office for National Statistics said. This is compared to a forecast of £ 6.5 billion by the Budget Liability Office, the Government fiscal Supervisor and a similar projection in a study of reuters of economists.
Reeves is preparing for a spring statement that will present a further squeeze of government spending while trying to keep public finances on the right track. The Chancellor has pledged, according to its fiscal rules, to balance the current budget, which excludes investments by 2029-30.
But the poor situation of economics and public finances means that forecasts by the OBR are expected to indicate that further expense restriction is required. The government has announced plans for savings of welfare of £ 5 billion a year, and is expected to detect fresh crushing at the department’s expenses on Wednesday.
“Cost reduction can go so far, and by stopping a surprise incentive to increase the UK this summer, we think further tax increases seem inevitable in the fall,” said James Smith, an economist in Ing. “Britain’s public finances are operating below borders.”
February borrowing overload was directed as one of the softer bills than expected and the highest expenses, leaving the government on the right track for a “heavy” overload in its current budget deficit in the current fiscal year, Alex Kerr said at Capital Economy.
The figures, he added, underlined “how difficult the election (Reeves) over the coming years.”
In the financial year to February, the deficit was 132.2bn £, about £ 14bn more than at the same point in the previous fiscal year. This was much over the forecast of £ 111.8bn from OBR in October 2024.
Overshoot, said Mark Dowding, chief of fixed income investment in RBC Bluebay Assset Management, was surprising given “Growth is weaker than OBR forecast and higher borrowing costs”.
The OBR in October predicted 2 percent GDP growth for this year, but weak curves mean that this will be cut sharply next week. Bank of England in February predicts only 0.75 percent to 2025.
UK government bonds weakened in the morning trade on Friday, subforming other large markets and pushing 10 years to 0.03 percentage points to 4.68 percent.
Poja Kumra, tariff strategist on TD securities, said the figures suggested that there were up to £ 20 billion in additional central government financing on current official expectations, which could mean more debt sales in the 2025-26 financial year.
Friday growth in gilded yields suggests that investors “are concerned that ultimately all such gaps will be covered with more release,” she added.
The net government debt ratio to GDP at the end of February was temporarily estimated at 95.5 percent, according to the Ines omission, 0.1 percentage points higher than a year earlier.
Reeves came out of its first budget in October with the head room against its current deficit rule of 9.9bn £, but has been deleted by increasing government borrowing costs and flat growth.
Gildlier investors have warned that the Chancellor will have to rebuild that head room to show that it is keeping Britain’s public finances in order.
Reeves has insisted that next week’s announcement will not be a major fiscal event, with officials saying there will be no tax increase.
But pressures, including the need to increase protection costs and repair public services, suggest that it may be forced to collect this parliament in further measures, economists warn.
Darren Jones, the main secretary of the Treasury, said: “We are focusing on the public sector on our missions and, for the first time in 17 years, going through every penny of the line of taxpayers from the line to make sure it is helping us to secure Britain’s future through the plan for change.
“At the core of this urgent mission are sound public finances, based on our non -negotiable fiscal rules.”
