NEWS

Borrowing ‘increases prospect of tax rises’

Experts have warned that recent higher than anticipated government borrowing figures have increased the prospect of Chancellor Rachel Reeves raising taxes at the next Budget.

Official data showed that government borrowing was £20.2 billion in April, which was an increase of £1 billion from the same month in 2024.

Experts have warned that weaker economic growth anticipated over the coming months could affect tax receipts, which would pile pressure on government finances.

The Chancellor aims to bring stability to the UK economy by paying for day-to-day government costs through tax income rather than borrowing and getting debt falling as a share of national income by the end of the current parliament.

Ruth Gregory, Deputy Chief Economist at Capital Economics, said: ‘With the Prime Minister announcing a partial U-turn on the cut to winter fuel payments, the dilemma faced by the Chancellor over how to deal with increased spending pressures in environment of low economic growth and high interest rates hasn't gone away.’

28/05/2025