London Daily

Focus on the big picture.
Wednesday, Jul 30, 2025

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
House Republicans Move to Defund OECD Over Global Tax Dispute
Botswana Seeks Controlling Stake in De Beers as Anglo American Prepares Exit
Trump Administration Proposes Repeal of Obama‑Era Endangerment Finding, Dismantling Regulatory Basis for CO₂ Emissions Limits
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
A family has been arrested in the UK for displaying the British flag
Mel Gibson refuses to work with Robert De Niro, saying, "Keep that woke clown away from me."
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
The British propaganda channel BBC News lies again.
Deputy attorney general's second day of meeting with Ghislaine Maxwell has concluded
Controversial March in Switzerland Features Men Dressed in Nazi Uniforms
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
Thai Civilian Death Toll Rises to 12 in Cambodian Cross-Border Attacks
TSUNAMI: Trump Just Crossed the Rubicon—And There’s No Turning Back
Over 120 Criminal Cases Dismissed in Boston Amid Public Defender Shortage
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
Trump Announces $550 Billion Japanese Investment and New Trade Agreements with Indonesia and the Philippines
US Treasury Secretary Calls for Institutional Review of Federal Reserve Amid AI‑Driven Growth Expectations
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Severe Flooding in South Korea Claims Lives Amid Ongoing Rescue Operations
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
CEO Resigns Amid Controversy Over Relationship with HR Executive
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
Epstein Files Deepen Republican Party Divide
Zuckerberg Faces $8 Billion Privacy Lawsuit From Meta Shareholders
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
SpaceX Nears $400 Billion Valuation With New Share Sale
Microsoft, US Lab to Use AI for Faster Nuclear Plant Licensing
Trump Walks Back Talk of Firing Fed Chair Jerome Powell
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Irish Tech Worker Detained 100 days by US Authorities for Overstaying Visa
×