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.