London Daily

Focus on the big picture.
Monday, Feb 09, 2026

UK to unveil record £400 billion borrowing plan next week

UK to unveil record £400 billion borrowing plan next week

British finance minister Rishi Sunak will announce the heaviest public borrowing since World War Two when he spells out his spending plans next week after the biggest economic crash in over 300 years.

With Britain in the midst of a second wave of COVID-19 cases and economic recovery on hold, Sunak has postponed longer-term plans for the public finances.

Spending on the pandemic is on track to exceed 200 billion pounds this year after the extension of job protection programmes, and other costs are likely to spill into the 2021/22 fiscal year.

Only the armed forces will receive a multi-year increase in funding as Prime Minister Boris Johnson seeks to boost Britain’s profile outside the European Union.

Sunak’s other spending announcements on Wednesday are likely to be dwarfed by the scale of new borrowing forecasts which will underscore the need for future tax rises.

“Events next week might... prove an important prelude for a pivot to a tighter fiscal approach in the spring budget,” economists at Citi said in a note to clients.

As Sunak starts to look for ways to begin reining in the huge surge in borrowing, media reported that he plans to freeze pay for public-sector workers other than health staff.

Prime Minister Boris Johnson has refused to commit to maintaining spending on overseas aid.

Britain’s economy shrank by 20% between April and June, more than any other major economy, and it has been slower to recover.

The Bank of England has pencilled in an 11% fall in GDP for 2020, a drop last seen in 1709.

Government borrowing this financial year is likely to be around 400 billion pounds, according to Citi, while HSBC has forecast 365 billion pounds.

This is equivalent to between 17% and 20% of GDP, well above its 10% peak at the height of the global financial crisis.

Data published on Friday showed 215 billion pounds of borrowing in just the first seven months of this financial year, nearly five times more than at the same point in 2019.

This is likely to fall as emergency pandemic spending is scaled back but HSBC expects it will be a still unsustainable 8.5% of GDP in 2021/22.

Citi predict an extra 800 billion pounds of borrowing over the next five years, compared with forecasts in March.

TAX RISES


Sunak has warned of hard decisions ahead to get the public finances “on a sustainable path” over time.

Big spending cuts are less likely than after the financial crisis because public service have undergone a decade-long squeeze and pressures from an ageing population are growing.

The scale of any tax rises will not become clear until the economy is on a more even keel.

The Resolution Foundation think tank says tax rises raising 40 billion pounds a year will be needed before the 2024 election just to stabilise the public finances and fund social care.

For now financial markets are happy to fund the borrowing at almost record low interest rates. Britain’s Debt Management Office will publish bond sale plans on Wednesday.

HSBC sees a further 100 billion pounds of gilt issuance this financial year, taking the total to a record 480 billion pounds, and up to 300 billion pounds more in 2021/22.

The government will also publish a delayed review on when to phase out the RPI measure of inflation used to calculate payments on inflation-linked bonds, which now overstates price rises.

Newsletter

Related Articles

0:00
0:00
Close
China and UK Signal Tentative Reset with Commitment to Steadier, Professionally Managed Relations
UK Confirms Imminent Increase in ETA Fee to £20 as Entry Rules Tighten
UK Signals Possible Seizure of Russia-Linked ‘Shadow Fleet’ Tanker in Escalation of Sanctions Enforcement
Epstein Scandal Piles Unprecedented Pressure on UK Prime Minister Keir Starmer’s Leadership
UK’s ‘Most Romantic Village’ Celebrates Valentine’s Day and Explores the Festival’s Rich History
The Implications of Expanding Voting Rights to Non-EU Foreign Residents in France
Ghislaine Maxwell to Testify Before US Congress on February 9
Al.com Acquired by Crypto.com Founder for $70 Million
Apple iPhone Lockdown Mode blocks FBI data access in journalist device seizure
Belgium: Man Charged with Rape After Faking Payment to Sex Worker
KPMG Urges Auditor to Relay AI Cost Savings
US and Iran to Begin Nuclear Talks in Oman
Winklevoss-Led Gemini to Slash a Quarter of Jobs and Exit European and Australian Markets
Canada Opens First Consulate in Greenland Amid Rising Geopolitical Tensions
China unveils plans for a 'Death Star' capable of launching missile strikes from space
NASA allows astronauts to take smartphones on upcoming missions to capture special moments.
Trump administration to launch TrumpRx.gov for direct drug purchases
Investigation Launched at Winter Olympics Over Ski Jumpers Injecting Hyaluronic Acid
U.S. State Department Issues Urgent Travel Warning for Citizens to Leave Iran Immediately
Wall Street Erases All Gains of 2026; Bitcoin Plummets 14% to $63,000
Epstein Case Documents Reignite Global Scrutiny of Political and Business Elites
Eighty-one-year-old man in the United States fatally shoots Uber driver after scam threat
UK Royal Family Faces Intensifying Strain as Epstein-Linked Revelations Rock the Institution
Political Censorship: French Prosecutors Raid Musk’s X Offices in Paris
AI Invented “Hot Springs” — Tourists Arrived and Were Shocked
Tech Mega-Donors Power Trump-Aligned Fundraising Surge to $429 Million Ahead of 2026 Midterms
UK Pharma Watchdog Rules Sanofi Breached Industry Code With RSV Vaccine Claims Against Pfizer
Melania Documentary Opens Modestly in UK with Mixed Global Box Office Performance
Starmer Arrives in Shanghai to Promote British Trade and Investment
Harry Styles, Anthony Joshua and Premier League Stars Among UK’s Top Taxpayers
New Epstein Files Include Images of Former Prince Andrew Kneeling Over Unidentified Woman
Starmer Urges Former Prince Andrew to Testify Before US Congress About Epstein Ties
Starmer Extends Invitation to Japan’s Prime Minister After Strategic Tokyo Talks
Skupski and Harrison Clinch Australian Open Men’s Doubles Title in Melbourne
DOJ Unveils Millions of Epstein Files, Fueling Global Scrutiny of Elite Networks
France Begins Phasing Out Zoom and Microsoft Teams to Advance Digital Sovereignty
China Lifts Sanctions on British MPs and Peers After Starmer Xi Talks in Beijing
Trump Nominates Kevin Warsh as Fed Chair to Reorient U.S. Monetary Policy Toward Pro-Growth Interest Rates
AstraZeneca Announces £11bn China Investment After Scaling Back UK Expansion Plans
Starmer and Xi Forge Warming UK-China Ties in Beijing Amid Strategic Reset
Tech Market Shifts and AI Investment Surge Drive Global Innovation and Layoffs
Markets Jolt as AI Spending, US Policy Shifts, and Global Security Moves Drive New Volatility
U.S. Signals Potential Decertification of Canadian Aircraft as Bilateral Tensions Escalate
Former South Korean First Lady Kim Keon Hee Sentenced to 20 Months for Bribery
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
×