London Daily

Focus on the big picture.
Saturday, Aug 30, 2025

UK to unveil record 400 billion-pound borrowing plan next week

UK to unveil record 400 billion-pound borrowing plan next week

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 ($265 billion) this year after the extension of job protection programs, and other costs are likely to spill into the 2021/22 fiscal year.

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 ($265 billion) this year after the extension of job protection programs, 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 penciled 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 stabilize 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
Corporate America Cuts Middle Management as Bosses Take On Triple the Workload
Parents Sue OpenAI After Teen’s Death, Alleging ChatGPT Encouraged Suicide
Amazon Faces Lawsuit Over 'Buy' Label on Digital Streaming Content
Federal Reserve Independence Questioned Amid Trump’s Push to Reshape Central Bank
British Politics Faces Tumultuous Autumn After Summer of Rebellions and Rising Farage Momentum
US Appeals Court Rules Against Most Trump-Era Tariffs
UK Sought Broad Access to Apple Users’ Data, Court Filing Reveals
UK Bank Shares Dive Over Potential Tax on Sector
Germany’s Auto Industry Sheds 51,500 Jobs in First Half of 2025 Amid Deepening Crisis
Bruce Willis Relocated Due to Advanced Dementia
French and Korean Nuclear Majors Clash As EU Launches Foreign Subsidy Probe
EU Stands Firm on Digital Rules as Trump Warns of Retaliation
Getting Ready for the 3rd Time in Its History, Germany Approves Voluntary Military Service for Teenagers
Argentine President Javier Milei Evacuated After Stones Thrown During Campaign Event
Denmark Confronts U.S. Diplomat Over Covert Trump-Linked Influence in Greenland
Starmer Should Back Away from ECHR, Says Jack Straw
Trump Demands RICO Charges Against George Soros and Son for Funding Violent Protests
Taylor Swift Announces Engagement to NFL Star Travis Kelce
France May Need IMF Bailout, Warns Finance Minister
Chinese AI Chipmaker Cambricon Posts Record Profit as Beijing Pushes Pivot from Nvidia
After the Shock of Defeat, Iranians Yearn for Change
Ukraine Finally Allows Young Men Aged Eighteen to Twenty-Two to Leave the Country
The Porn Remains, Privacy Disappears: How Britain Broke the Internet in Ten Days
YouTube Altered Content by Artificial Intelligence – Without Permission
Welcome to The Definition of Insanity: Germany Edition
Just a reminder, this is Michael Jackson's daughter, Paris.
Spotify’s Strange Move: The Feature Nobody Asked For – Returns
Manhunt in Australia: Armed Anti-Government Suspect Kills Police Officers Sent to Arrest Him
China Launches World’s Most Powerful Neutrino Detector
How Beijing-Linked Networks Shape Elections in New York City
Ukrainian Refugee Iryna Zarutska Fled War To US, Stabbed To Death
Elon Musk Sues Apple and OpenAI Over Alleged App Store Monopoly
2 Australian Police Shot Dead In Encounter In Rural Victoria State
Vietnam Evacuates Hundreds of Thousands as Typhoon Kajiki Strikes; China’s Sanya Shuts Down
UK Government Delays Decision on China’s Proposed London Embassy Amid Concerns Over Redacted Plans
A 150-Year Tradition to Be Abolished? Uproar Over the Popular Central Park Attraction
A new faith called Robotheism claims artificial intelligence isn’t just smart but actually God itself
Deputy Prime Minister Angela Rayner Purchases Third Property Amid Housing Tax Reforms Debate
HSBC Switzerland Ends Relationships with Over 1,000 Clients from Saudi Arabia, Lebanon, Qatar, and Egypt
Sharia Law Made Legally Binding in Austria Despite Warnings Over 'Incompatible' Values
Italian Facebook Group Sharing Intimate Images Without Consent Shut Down Amid Police Investigation
Dutch Foreign Minister Resigns Amid Deadlock Over Israel Sanctions
Trump and Allies Send Messages of Support to Ukraine on Independence Day Amid Ongoing Conflict
China Reels as Telegram Chat Group Shares Hidden-Camera Footage of Women and Children
Sam Nicoresti becomes first transgender comedian to win Edinburgh Comedy Award
Builders uncover historic human remains in Lancashire house renovation
Australia Wants to Tax Your Empty Bedrooms
MotoGP Cameraman Narrowly Avoids Pedro Acosta Crash at Hungarian Grand Prix
FBI Investigates John Bolton Over Classified Documents in High-Profile Raids
Report reveals OpenAI pitched national ChatGPT Plus subscription to UK ministers
×