Post by : Badri Ariffin

The UK’s public finances are under fresh scrutiny as new figures reveal government borrowing for October reached £17.4 billion, surpassing economists’ expectations. While slightly lower than last year, it ranks as the third-highest October borrowing on record.

Borrowing over the first seven months of the financial year totals £116.8 billion, roughly 3.9% of the UK’s economic output. This is £9.9 billion above forecasts set by the Office for Budget Responsibility (OBR) earlier this year, signalling a growing challenge for Chancellor Rachel Reeves ahead of the November 26 Budget.

Much of the borrowing increase is linked to higher spending, partially offset by rising tax receipts. National Insurance contributions rose £2.8 billion compared with last year, bringing the total to £16.9 billion. Despite this, public sector net debt now stands at £2.77 trillion—around 90% of GDP—levels last seen in the early 1960s.

Interest payments on government debt eased slightly last month to £8.4 billion, thanks to falling inflation rates, yet remain a significant portion of taxpayer spending. Treasury officials have indicated that the upcoming Budget will focus on strategies to reduce borrowing and debt costs.

Analysts warn that without tighter control on spending, borrowing could exceed forecasts by around £10 billion this year, pushing the deficit closer to 5% of GDP. With limited room under fiscal rules, discussions suggest the government may explore a mix of smaller tax measures rather than a broad income tax increase.

As the Budget approaches, attention is now on how the government will address this financial gap while balancing the need for public investment and fiscal responsibility.

#Business News #Economic