UK Borrowing: £17.7bn Rise & Pressure on Reeves
- Despite increased tax receipts, public sector borrowing in the United Kingdom rose to £17.7 billion in May, according to new figures.
- City economists had predicted a lower public sector net borrowing figure of £17.1 billion.
- Chancellor of the Exchequer Rachel Reeves has emphasized the need to maintain strict limits on day-to-day Whitehall budgets, even with over £100 billion allocated for extra investment spending...
UK borrowing surged to £17.7 billion in May, a significant increase despite rising tax receipts, sparking renewed examination of teh UK’s financial health. This marks the second-highest borrowing for May on record, exceeding economist predictions of £17.1 billion, intensifying the pressure on Chancellor Rachel Reeves, who faces the challenge of reducing the annual deficit. Even with increased taxes, the government grapples with managing spending, as outlined by News directory 3. The current budget deficit remains below the Office for Budget Responsibility’s forecast. Dive into the potential impact of downgraded growth prospects adn the impending decisions of backbench MPs. Discover what’s next …
UK Borrowing Climbs Despite Higher Tax Receipts
Updated June 20, 2025
Despite increased tax receipts, public sector borrowing in the United Kingdom rose to £17.7 billion in May, according to new figures. This is up from £17 billion the previous year and marks the second-highest May borrowing on record. The figures highlight the ongoing challenge for the goverment to reduce the annual deficit while adhering to strict spending rules.
City economists had predicted a lower public sector net borrowing figure of £17.1 billion. The difference between public spending and income is a key indicator of the UK’s financial health. The higher-than-expected borrowing will likely fuel concerns about the government’s ability to manage its finances effectively.
Chancellor of the Exchequer Rachel Reeves has emphasized the need to maintain strict limits on day-to-day Whitehall budgets, even with over £100 billion allocated for extra investment spending in the last budget. Reeves also implemented increased taxes on businesses, including a rise in national insurance contributions, which took effect in April.
The current budget deficit, which measures the shortfall in day-to-day spending, remained below the forecast by the Office for Budget Responsibility (OBR).The OBR had anticipated a deficit of £13 billion for May, but the actual figure was £12.8 billion.This marks the second consecutive month that the deficit has fallen below the OBR’s prediction.
However, the International Monetary Fund and the Bank of England have downgraded the UK’s growth prospects for the year.Weaker growth could lead to reduced tax receipts, perhaps forcing the chancellor to implement further spending cuts or raise taxes to maintain fiscal balance. Backbench Labour MPs are expected to rebel against welfare bill cuts worth more than £5 billion.
What’s next
The OBR forecasts borrowing to decrease from £152 billion in 2024-25 to £117.7 billion in the 2025-26 financial year. The government’s ability to meet this target will depend on economic performance and the effectiveness of its fiscal policies.