The UK’s borrowing was up £2.3bn higher than economists had forecasted in April despite Chancellor Rachel Reeves’ efforts to cut costs and increase income.
It rose to £20.2bn in April, overshooting the £17.9bn estimate set beforehand. The latest figure marks a £1bn increase compared to the same period last year and the fourth-highest April for borrowing since records began in 1993.
AJ Bell’s head of financial analysis Danni Hewson said inflation linked benefit increases, pay rises and increasing costs were unexpectedly high. This could put Reeves in a challenging spot in the months ahead.
“It’s not the start to the year the Chancellor would have wished for,” Hewson said. “Despite the impact of her budget changes to employers National Insurance kicking in and boosting Treasury coffers by almost £2bn, April’s numbers suggest there is still much more to do.
“Going into next month’s spending review Rachel Reeves must feel like a tightrope walker being pushed and pulled in all directions by the demands of different departments and public opinion.
“The government hoped it could grow its way out of the situation it inherited, and the economy has been faring better than many had expected. But with inflation rising and geopolitics fractious, everyone will be wondering how good the Chancellor is at keeping her balance.”