London Daily

Focus on the big picture.
Saturday, Jul 05, 2025

Chancellor blames 'eye-watering sums' spent on pandemic and energy bills support for hike in public sector borrowing

Chancellor blames 'eye-watering sums' spent on pandemic and energy bills support for hike in public sector borrowing

Initial estimates for March show that the public sector spent more than it received in taxes and other income, requiring it to borrow £21.5bn.
The chancellor has blamed the "eye-watering sums" spent on helping people through the coronavirus pandemic and energy crisis for an increase in public sector borrowing.

Public sector net borrowing was £21.5bn last month - the second-highest March borrowing since monthly records began in 1993.

This means that the public sector spent more than it received in taxes and other income, requiring it to borrow the shortfall.

The amount also capped off the fourth-highest borrowing for a financial year since records began - £139.2bn, or 5.5% of GDP.

Chancellor Jeremy Hunt blamed the COVID-19 pandemic and the rise in energy prices, which was worsened by Russia's invasion of Ukraine.

He said: "These numbers reflect the inevitable consequences of borrowing eye-watering sums to help families and businesses through a pandemic and Putin's energy crisis.

"We were right to do so because we have managed to keep unemployment at a near-record low and provided the average family more than £3,000 in cost of living support this year and last.

"We stepped up to support the British economy in the face of two global shocks, but we cannot borrow forever. We now have a clear plan to get debt falling which will reduce the financial pressure we pass onto our children and grandchildren."

The £21.5bn borrowed in March was £14.5bn more than the amount borrowed in March 2020, at the beginning of the pandemic.

Choppy waters ahead for the public finances

Michal Stelmach, senior economist at KPMG UK, said public sector net borrowing over the year was £18bn higher than in the previous year, but less than half of the borrowing seen at the peak of the pandemic.

This difference reflects "a relatively smaller package of measures to tackle the energy crisis", Mr Stelmach said.

"Year-to-date outturn has been revised down substantially following the ONS correction to student loans arrangements, which reduces the proportion of student loan spending recorded as government investment," he added.

"This brings the full-year borrowing figure £13.2bn below the OBR's latest forecast, which already accounted for the impact of that change.

"Following a rollercoaster of economic shocks, public sector net debt reached 99.6% of GDP, its highest level since 1960-61.

"While the UK is not unique in facing pressures on the public finances, with recent shocks being largely global in nature, we estimate that around a quarter of the increase in gilt yields over the past year could be attributed to UK-specific factors."
Newsletter

Related Articles

0:00
0:00
Close
London Stock Exchange Faces Historic Low in Initial Public Offerings
A new online platform has emerged in the United Kingdom, specifically targeting Muslim men seeking virgin brides
Trump Celebrates Independence Day with B-2 Flyover and Signs Controversial Legislation
Boris Johnson Urges Conservatives to Ignore Farage
SNP Ordered to Update Single-Sex Space Guidance Within Days
Starmer Set to Reject Calls for Wealth Taxes
Stolen Century-Old Rolls-Royce Recovered After Hotel Theft
Macron Presses Starmer to Recognise Palestinian State
Labour Delayed Palestine Action Ban Over Riot Concerns
Swinney’s Tax Comments ‘Offensive to Scots’, Say Tories
High Street Retailers to Enforce Bans on Serial Shoplifters
Music Banned by Henry VIII to Be Performed After 500 Years
Steve Coogan Says Working Class Is Being ‘Ethnically Cleansed’
Home Office Admits Uncertainty Over Visa Overstayer Numbers
JD Vance Questions Mandelson Over Reform Party’s Rising Popularity
Macron to Receive Windsor Carriage Ride in Royal Gesture
Labour Accused of ‘Hammering’ Scots During First Year in Power
BBC Head of Music Stood Down Amid Bob Vylan Controversy
Corbyn Eyes Hard-Left Challenge to Starmer’s Leadership
London Tube Trains Suspended After Major Fire Erupts Nearby
Richard Kemp: I Felt Safer in Israel Under Attack Than in the UK
Cyclist Says Police Cited Human Rights Act for Riding No-Handed
China’s Central Bank Consults European Peers on Low-Rate Strategies
AI Raises Alarms Over Long-Term Job Security
Saudi Arabia Maintains Ties with Iran Despite Israel Conflict
Musk Battles to Protect Tesla Amid Trump Policy Threats
Air France-KLM Acquires Majority Stake in Scandinavian Airlines
UK Educators Sound Alarm on Declining Child Literacy
Shein Fined €40 Million in France Over Misleading Discounts
Brazil’s Lula Visits Kirchner During Argentina House Arrest
Trump Scores Legislative Win as House Passes Tax Reform Bill
Keir Starmer Faces Criticism After Rocky First Year in Power
DJI Launches Heavy-Duty Coaxial Quadcopter with 80 kg Lift Capacity
U.S. Senate Approves Major Legislation Dubbed the 'Big Beautiful Bill'
Largest Healthcare Fraud Takedown in U.S. History Announced by DOJ
Poland Implements Border Checks Amid Growing Migration Tensions
Political Dispute Escalates Between Trump and Musk
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
US Senate Votes to Remove AI Regulation Moratorium from Domestic Policy Bill
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
Jury Deliberations in Diddy Trial Yield Partial Verdict in Serious Criminal Charges
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
King Charles Plans Significant Role for Prince Harry in Coronation
Two Chinese Nationals Arrested for Espionage Activities Against U.S. Navy
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
Trump Administration Considers Withdrawal of Funding for Hospitals Providing Gender Treatment to Minors
×