UK borrowing reduces Chancellor’s wiggle room

Higher than expected government borrowing has reduced the Chancellor’s ‘wiggle room’ at a pre-election Budget.

Government borrowing - the difference between spending and tax income - was £120.7 billion in the year to March, according to the latest figures from the Office for National Statistics (ONS).

This was £7.6 billion lower than last year, but £60 billion higher than the year before the pandemic and, critically, £6.6 billion higher than the Office for Budget Responsibility’s (OBR) forecast at the Spring Budget.

High inflation and rising interest rates also contributed to public spending rising by £58 billion for the year, according to the ONS.

Cara Pacitti, Senior Economist at the Resolution Foundation, said:

‘Last year was one of high but falling inflation and rising interest rates, causing both spending and tax receipts to rise in nominal terms compared to the year before.

‘While lower than last year, borrowing is already £6.6 billion higher than forecast at the Spring Budget last month. So far there are no signs of any new fiscal wriggle room emerging that might allow the Chancellor to announce another pre-election Budget in the Autumn.’

Internet links: ONS website Resolution Foundation website