Getty ImagesGovernment borrowing rose more than expected in December, hitting its highest level for the month for four years, official figures show.
Borrowing – the difference between spending and tax revenue – was £17.8bn last month, £10.1bn more than in December 2023, the Office for National Statistics (ONS) said.
Spending on public services, benefits, and debt interest were all up on the year, the ONS said, while an increase in tax take was offset by a cut to National Insurance by the previous government.
The increased borrowing comes after interest rates paid on government debt surged earlier this month before falling back.
The spike in borrowing costs threatens 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 growing the economy is its main priority in order to boost living standards.
Last month, the interest charged on government debt was £8.3bn, which was £3.8bn more than it was the year before.
The amount marked the third-highest December debt interest repayments since monthly records began in January 1997.
Alex Kerr, UK economist at Capital Economics, said against the backdrop of sluggish economic growth and high interest rates, “December’s overshoot in borrowing is further disappointing news for the chancellor”.
He said the majority of the higher borrowing was due to a one-off £1.7bn payment from the government to the private sector to repurchase military accommodation.
The total £17.8bn borrowed by the government was much higher than the £14.6bn forecast Office for Budget Responsibility, the UK’s official forecaster.
The amount borrowed was the third-highest for a December since monthly records began in 1993.
It means, with most of the financial year gone, the difference between what the government has spent and what it earns in taxes is £4bn more than official forecasts.
However, that figure includes lots of estimates which are often revised at a later date.
This is particularly true around this time of year when lots of people submit self-assessment tax returns, which increases the government’s revenue.
The latest figures will add to speculation that Reeves, who has vowed to keep an “iron grip” on the public finances, could cut public spending.
Chief Secretary to the Treasury Darren Jones said the government would “root out waste to ensure every penny of taxpayer’s money is spent productively”.
“Economic stability is vital for our number one mission of delivering growth,” he added.
But Elliott Jordan-Doak, senior UK economist at Pantheon Macroeconomics, said the rise in the cost for the government to borrow money as well as inflation, which is the rate prices rise at over time, heading back up, would “heap further pressure on government spending”.
He said he expected Reeves to outline public spending reductions in March, adding that “further tax increases at the next Budget in October is also a good bet”.
