UK Borrowing Hits Record October High Following Public Sector Pay Increases

Chancellor Rachel Reeves faces fiscal challenges as government spending outpaces revenue growth, driven by inflation-linked debt costs and public sector pay rises.

UK government borrowing reached £17.4 billion in October 2024, the second-highest October figure since records began in 1993, exceeding economists' forecasts by £4 billion.
Public sector spending increases, including £9.4 billion in inflation-linked pay rises for state workers and higher welfare costs, have significantly strained the budget.
Debt interest payments climbed to £9.1 billion in October, the highest for the month since 1997, as inflation-driven repayment rates on index-linked gilts rose.
The UK’s public sector net debt stands at 97.5% of GDP, while a new measure preferred by the Chancellor places it at 83.7% of GDP, reflecting ongoing fiscal pressures.
Economists warn that further tax increases or spending cuts may be required to meet fiscal targets, with Reeves already implementing the largest tax hike in UK history in her recent budget.