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The UK government took on more debt than expected in December, underscoring the challenge Chancellor Rachel Reeves faces as she tries to restore confidence in her fiscal plans and kickstart growth.
Borrowing — the difference between public sector spending and revenue — was 17.8 billion pounds last month, 10.1 billion pounds more than in December 2023 and the biggest December borrowing in four years, data from the Office for National Statistics showed on Wednesday.
It was also above the 14.1 billion pounds expected by economists polled by Reuters, and compared with a forecast of 14.6 billion pounds by the Office for Budget Responsibility, Britain’s fiscal watchdog.
In the first nine months of the fiscal year, borrowing was £129.9bn, £8.9bn more than in the same period in 2023, the second highest borrowing in the financial year to December since monthly records began in January 1993 and more than the OBR predicts £125.9 billion.
Reeves sought to reassure investors after the UK’s borrowing costs rose this month to their highest level since the global financial crisis, threatening its ability to meet a self-imposed fiscal rule that sees day-to-day spending covered by tax receipts.
The UK’s borrowing costs have eased since last week’s data showed inflation unexpectedly slowed in December and a global bond selloff eased.
But the government remains under pressure to turn around an economy that grew just 0.1 percent in November after mild contractions in September and October.
This is a developing story
