UK government borrows exceeding expectations

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According to official data, the UK government sharply borrowed expectations in February, emphasizing the pressure on Chancellor Rachel Reeves when it is preparing for its spring statement next week.

Last month, the deficit between income and expenses amounted to £ 10.7 billion, the office of national statistics reports. This is compared to the £ 6.5 billion forecast from the budget liability, the government financial guard and the similar projection in the Reuters economists.

Reeves preparing for Spring statement This will introduce further compression into public expenses when it tries to keep public finances on the way. The Chancellor promised, according to its financial rules, to balance the current budget, which eliminates the investment up to 2029-30.

But the weak state of the economy and State Finance OBR forecasts are expected to show that further cost restriction is required. The government has announced plans to save £ 5 billion a year, and is expected to open fresh squeezing on Wednesday.

“Cutting costs can only go so far, and this is an unexpected increase in UK growth this summer, we believe that further tax raises look inevitable in the fall,” said James Smith, an economist in Ing. “The UK state finances are increasingly thin.”

February exceeding borrowing was caused by softer than expected revenues, and higher expenses, leaving the government on the way to “hefty” overlappings in the current budget deficit in the current financial year, said Alex KER on the capital economy.

He added that these figures emphasize “how difficult the choice (shiiz) will be over the next few years.”

In the financial year, until February, the deficit amounted to 132.2 billion pounds, about £ 14 billion more than at the same time in the previous financial year. It was much higher than the £ 111.8 billion forecast in October 2024.

According to Mark Dyding, the head director of fixed income investment in RBC Bluebay Asset Management was unexpected, given that “growth is weaker than the OBR forecast and borrowing costs above.”

OBR predicted GDP growth by 2 percent this year in October, but weak turns mean that this will cut dramatically next week. In February, the Bank of England is predicted by only 0.75 percent in 2025.

On Friday, the UK government bonds weakened the morning bidding, insufficiently allocating other major markets and pushing 10-year profitability by 0.03 percentage points up to 4.68 percent.

The Pooja Kumra, the TD Securities strategist, said the figures suggested that the additional needs of the Central Government is up to 20 billion pounds above current official expectations, which could mean greater debt in the financial year 2025-26.

On Friday, the growth of gilding yields suggests that investors “are experiencing that in the end all such gaps will be covered by more releases,” she added.

The pure government debt rate at the end of February was temporarily estimated at 95.5 percent, according to the ONS release, 0.1 percentage points higher than a year ago.

Riviz came out of the first budget in October with the main reserve against its current 9.9 billion deficit rule, but this was destroyed by increasing public costs for borrowing and growth.

Gilded investors warn that the chancellor will need restore this covenant To show that it retains the UK state finance in order.

Reeves insisted that the ad next week would not be a major financial event, and officials stated that there would be Tax does not increase.

But the pressure, including the need to increase the cost of protection and repair of public services, believes that it can be made to further measures to increase the income of this parliament, economists warn.

Darren Jones, Chief Treasury Secretary, said: “We are reorienting the public sector on our missions and for the first time in 17 years, experiencing every penny of taxpayers on the line to make sure it helps us to provide the future of Britain through a plan of change.

“At the heart of this urgent mission are reasonable public finance based on our non -volume financial rules.”