London Daily

Focus on the big picture.
Thursday, Jan 29, 2026

Rishi Sunak handed borrowing boost before spring statement

Rishi Sunak handed borrowing boost before spring statement

Figures could improve chances of tax cuts, but inflation drives up cost of government debt
Rishi Sunak has been handed a boost from figures showing lower government borrowing than official estimates on the eve of the spring statement.

The figures come despite a sharp rise in debt interest payments last month amid soaring inflation.

The Office for National Statistics said borrowing over the first 11 months of the financial year 2021-22 was £138.4bn, less than half the sum borrowed a year earlier and almost £26bn less than estimated by the Office for Budget Responsibility in October.

Analysts said the figures, helped by resilience in the jobs market after the end of furlough, could strengthen Sunak’s position at the spring statement to offer tax cuts or additional spending to cushion the blow from the big rise in living costs.

However, the latest snapshot showed a worsening picture for the public finances in February as the budget deficit – the gap between spending and income – came in at £13.1bn, the second-highest borrowing figure for that month since records began in 1993.

Inflation has pushed up interest payments on government debt by more than 50% to £8.2bn, the highest February figure on record. City economists had forecast a borrowing figure of about £8.1bn for the month.

Sunak is understood to have drawn up a range of options to help with the cost of living crisis, including a 1p cut to income tax, raising the national insurance threshold and a significant cut to fuel duty. However, he may use the February borrowing figures to insist on a more limited approach. Responding to the latest snapshot, the chancellor said it was now “more important than ever” to take a responsible approach to the public finances.

“With inflation and interest rates still on the rise, it’s crucial that we don’t allow debt to spiral and burden future generations with further debt,” he said. “Look at our record, we have supported people – and our fiscal rules mean we have helped households while also investing in the economy for the longer term.”

James Smith, the research director at the Resolution Foundation, said Sunak needed to take the opportunity to provide emergency support to families.

“The chancellor will approach the UK’s latest crisis – the tightest income squeeze in generations, exacerbated by the Russian invasion of Ukraine – with the public finances in better shape than expected, increasing the chance of significant policy action to support families through the tough year ahead,” he said.

Despite the hit from higher debt servicing costs, the recent rise for inflation is expected to have some benefits for the public purse. Government income from fuel duty and VAT on energy bills has increased over the past year, while Sunak’s plan to freeze the income tax personal allowance and higher-rate threshold over four years is expected to generate £21bn, more than double the amount budgeted for owing to rising inflation, according to the Institute for Fiscal Studies.

Despite the highest rates of inflation since the early 1990s, the government’s debt servicing costs as a proportion of national income remain low compared with recent decades.
Newsletter

Related Articles

0:00
0:00
Close
Tesla Ends Model S and X Production and Sends $2 Billion to xAI as 2025 Revenue Declines
China Executes 11 Members of the Ming Clan in Cross-Border Scam Case Linked to Myanmar’s Lawkai
Trump Administration Officials Held Talks With Group Advocating Alberta’s Independence
Starmer Signals UK Push for a More ‘Sophisticated’ Relationship With China in Talks With Xi
Shopping Chatbots Move From Advice to Checkout as Walmart Pushes Faster Than Amazon
Starmer Seeks Economic Gains From China Visit While Navigating US Diplomatic Sensitivities
Starmer Says China Visit Will Deliver Economic Benefits as He Prepares to Meet Xi Jinping
UK Prime Minister Starmer Arrives in China to Bolster Trade and Warn Firms of Strategic Opportunities
The AI Hiring Doom Loop — Algorithmic Recruiting Filters Out Top Talent and Rewards Average or Fake Candidates
Amazon to Cut 16,000 Corporate Jobs After Earlier 14,000 Reduction, Citing Streamlining and AI Investment
Federal Reserve Holds Interest Rate at 3.75% as Powell Faces DOJ Criminal Investigation During 2026 Decision
Putin’s Four-Year Ukraine Invasion Cost: Russia’s Mass Casualty Attrition and the Donbas Security-Guarantee Tradeoff
Wall Street Bets on Strong US Growth and Currency Moves as Dollar Slips After Trump Comments
UK Prime Minister Traveled to China Using Temporary Phones and Laptops to Limit Espionage Risks
Google’s $68 Million Voice Assistant Settlement Exposes Incentives That Reward Over-Collection
Kim Kardashian Admits Faking Paparazzi Visit to Britney Spears for Fame in Early 2000s
UPS to Cut 30,000 More Jobs by 2026 Amid Shift to High-Margin Deliveries
France Plans to Replace Teams and Zoom Across Government With Homegrown Visio by 2027
Trump Removes Minneapolis Deportation Operation Commander After Fatal Shooting of Protester
Iran’s Elite Wealth Abroad and Sanctions Leakage: How Offshore Luxury Sustains Regime Resilience
U.S. Central Command Announces Regional Air Exercise as Iran Unveils Drone Carrier Footage
Four Arrested in Andhra Pradesh Over Alleged HIV-Contaminated Injection Attack on Doctor
Hot Drinks, Hidden Particles: How Disposable Cups Quietly Increase Microplastic Exposure
UK Banks Pledge £11 Billion Lending Package to Help Firms Expand Overseas
Suella Braverman Defects to Reform UK, Accusing Conservatives of Betrayal on Core Policies
Melania Trump Documentary Sees Limited Box Office Traction in UK Cinemas
Meta and EssilorLuxottica Ray-Ban Smart Glasses and the Non-Consensual Public Recording Economy
WhatsApp Develops New Meta AI Features to Enhance User Control
Germany Considers Gold Reserves Amidst Rising Tensions with the U.S.
Michael Schumacher Shows Significant Improvement in Health Status
Greenland’s NATO Stress Test: Coercion, Credibility, and the New Arctic Bargaining Game
Diego Garcia and the Chagos Dispute: When Decolonization Collides With Alliance Power
Trump Claims “Total” U.S. Access to Greenland as NATO Weighs Arctic Basing Rights and Deterrence
Air France and KLM Suspend Multiple Middle East Routes as Regional Tensions Disrupt Aviation
U.S. winter storm triggers 13,000-plus flight cancellations and 160,000 power outages
Poland delays euro adoption as Domański cites $1tn economy and zloty advantage
White House: Trump warns Canada of 100% tariff if Carney finalizes China trade deal
PLA opens CMC probe of Zhang Youxia, Liu Zhenli over Xi authority and discipline violations
ICE and DHS immigration raids in Minneapolis: the use-of-force accountability crisis in mass deportation enforcement
UK’s Starmer and Trump Agree on Urgent Need to Bolster Arctic Security
Starmer Breaks Diplomatic Restraint With Firm Rebuke of Trump, Seizing Chance to Advocate for Europe
UK Finance Minister Reeves to Join Starmer on China Visit to Bolster Trade and Economic Ties
Prince Harry Says Sacrifices of NATO Forces in Afghanistan Deserve ‘Respect’ After Trump Remarks
Barron Trump Emerges as Key Remote Witness in UK Assault and Rape Trial
Nigel Farage Attended Davos 2026 Using HP Trust Delegate Pass Linked to Sasan Ghandehari
Gold Jumps More Than 8% in a Week as the Dollar Slides Amid Greenland Tariff Dispute
BlackRock Executive Rick Rieder Emerges as Leading Contender to Succeed Jerome Powell as Fed Chair
Boston Dynamics Atlas humanoid robot and LG CLOiD home robot: the platform lock-in fight to control Physical AI
United States under President Donald Trump completes withdrawal from the World Health Organization: health sovereignty versus global outbreak early-warning access
FBI and U.S. prosecutors vs Ryan Wedding’s transnational cocaine-smuggling network: the fight over witness-killing and cross-border enforcement
×