UK Government Faces Fiscal Crisis with Borrowing Surpassing Forecasts
Chancellor Rachel Reeves prepares spending cuts ahead of the Spring Statement as borrowing and stagnant growth strain public finances.
- UK public sector borrowing for February 2025 reached £10.7 billion, exceeding forecasts by £4.2 billion and marking the fourth-highest February borrowing on record.
- Borrowing for the financial year to date has already surpassed the Office for Budget Responsibility's (OBR) forecast of £127.5 billion, totaling £132.2 billion with one month remaining.
- The OBR is expected to halve its 2025 economic growth forecast from 2% to 1%, further complicating efforts to meet fiscal rules.
- Chancellor Rachel Reeves has ruled out tax increases and is focusing on significant spending cuts, including a £5 billion reduction in welfare spending, to address the fiscal challenges.
- The government's prioritization of defense spending and austerity measures over welfare and aid has drawn criticism from Labour backbenchers and the public.
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