Blow to Reeves as UK borrowing unexpectedly jumps

Government borrowing rose more than expected in December to hit its highest level for the month for four years, piling more pressure on the UK’s finances.
Borrowing – the difference between spending and tax revenue – was £17.8bn last month, £10.1bn more than in December 2023, official figures show.
Spending on public services, benefits, and debt interest were all up on the year, while an increase in tax receipts was offset by National Insurance cuts made by the previous government.
Recent spikes in borrowing costs threaten the government’s economic plans, with Chancellor Rachel Reeves facing pressure after figures last week showed the UK economy had flatlined.
The government has said economic growth is its top priority in order to boost living standards, but fears over the health of the UK economy adds to speculation that Reeves could cut spending on public services.
The total £17.8bn borrowed by the government last month was much higher than the £14.6bn forecast by the Office for Budget Responsibility, the UK’s official forecaster.
Interest charged on government debt hit £8.3bn, marking the third-highest December debt interest repayments since monthly records began in 1997.
Earlier this month the interest rates charged on government debt surged in part due to concerns over the UK’s economic outlook, before falling back.

On Wednesday, the interest rate charged on UK government debt over a 10-year period retreated to 4.5%, near to where it was at the start of the year.
During her visit to the World Economic Forum in Davos, Switzerland, Reeves played down the impact the recent market turbulence would have on her meeting her self-imposed borrowing rules, which aim to maintain credibility with financial markets and taxpayers.
The chancellor has made the trip to the event to drum up investment in the UK among the world’s biggest business leaders and financiers.