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3mo ago

UK Borrowing Hits £20.2bn in April, Surpassing Forecasts

Chancellor Rachel Reeves faces growing pressure to address surging debt and fiscal challenges ahead of June's spending review.

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Chancellor of the Exchequer Rachel Reeves speaks during a reception, following the UK-EU summit, in London, Britain, May 19, 2025. REUTERS/Hannah McKay/Pool/ File Photo
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Overview

  • Public sector net borrowing in April 2025 reached £20.2 billion, exceeding economists’ forecasts of £17.9 billion and marking the fourth-highest April borrowing on record.
  • The rise in borrowing was driven by a £4.2 billion year-on-year increase in government spending, largely due to higher public sector wages and inflation-linked benefits and pensions.
  • Public sector net debt climbed to 95.5% of GDP, its highest level since the 1960s, with annual interest costs projected to surpass £100 billion.
  • Rising gilt yields, which hit a multi-decade high of 5.554%, are increasing debt servicing costs and straining fiscal flexibility.
  • Chancellor Reeves is under mounting pressure to reconsider her fiscal rules, with economists warning that tax increases or spending cuts may be unavoidable to stabilize public finances.