This article is from the source 'bbc' and was first published or seen on . The next check for changes will be

You can find the current article at its original source at https://www.bbc.com/news/articles/cpwxzpqrnjko

The article has changed 10 times. There is an RSS feed of changes available.

Version 7 Version 8
Blow to Reeves as UK borrowing unexpectedly jumps Reeves optimistic despite surprise rise in UK borrowing
(about 5 hours later)
Government borrowing rose more than expected in December to hit its highest level for the month for four years, piling more pressure on the UK's finances. Chancellor Rachel Reeves says she is "optimistic" on the UK economy despite pressure on government finances after borrowing rose more than expected in December.
Borrowing - the difference between spending and tax revenue - was £17.8bn last month, £10.1bn more than in December 2023, official figures show. Borrowing - the difference between spending and tax revenue - was £17.8bn last month, the highest December level for four years, according to official figures.
Spending on public services, benefits, and debt interest were all up on the year, while an increase in tax receipts was offset by National Insurance cuts made by the previous government.Spending on public services, benefits, and debt interest were all up on the year, while an increase in tax receipts was offset by National Insurance cuts made by the previous government.
Recent spikes in borrowing costs threaten the government's economic plans, with Chancellor Rachel Reeves facing pressure after figures last week showed the UK economy had flatlined. Recent rises in borrowing costs threaten the government's economic plans, with Reeves under pressure after figures last week showed the UK economy had flatlined.
The government has said economic growth is its top priority in order to boost living standards, but fears over the health of the UK economy adds to speculation that Reeves could cut spending on public services. The government has said economic growth is its top priority in order to improve living standards, but fears over the health of the economy adds to speculation that Reeves could cut spending on public services.
The total £17.8bn borrowed by the government last month was much higher than the £14.6bn forecast by the Office for Budget Responsibility, the UK's official forecaster. The Chancellor repeated her pledge to go "further and faster" to deliver growth as she signalled her intention to back expansions to Heathrow and Gatwick Airports in a bid to boost the economy, despite environmental concerns.
Interest charged on government debt hit £8.3bn, marking the third-highest December debt interest repayments since monthly records began in 1997. "We will look at all plans to bring infrastructure, to bring investment to Britain," she told the BBC, on her visit at the World Economic Forum in Davos, Switzerland, where investors that own the airports were present.
Earlier this month the interest rates charged on government debt surged in part due to concerns over the UK's economic outlook, before falling back. "When there are decisions around infrastructure investment, the answer can't always be 'no', and with this government the answer is 'yes'," Reeves added.
On Wednesday, the interest rate charged on UK government debt over a 10-year period retreated to 4.5%, near to where it was at the start of the year.
During her visit to the World Economic Forum in Davos, Switzerland, Reeves played down the impact the recent market turbulence would have on her meeting her self-imposed borrowing rules, which aim to maintain credibility with financial markets and taxpayers.
The chancellor has made the trip to the event to drum up investment in the UK among the world's biggest business leaders and financiers.
But Alex Kerr, UK economist at Capital Economics, said against the backdrop of sluggish economic growth and high interest rates, "December's overshoot in borrowing is further disappointing news for the chancellor".
He added that while UK borrowing costs had fallen back, they were still higher than at the time of the Budget.
Mr Kerr said weak economic growth suggested that Reeves "may need to raise taxes and/or cut spending" in March in order to meet her own rules.
Elliott Jordan-Doak, senior UK economist at Pantheon Macroeconomics, said he also expected the chancellor to outline public spending reductions in March, adding that "further tax increases at the next Budget in October is also a good bet".
Reeves has previously said that she would not be "coming back with more borrowing or more taxes" following her first Budget in October.
Business are set to bear the brunt of tax rises coming into effect in April, with hikes in the National Insurance rate and a reduction to the threshold for employers.
Firms have repeatedly warned the extra costs, along with minimum wages rising and business rates relief being reduced, could impact UK economic growth, with employers expecting to have less cash to give pay rises and create new jobs.
On Wednesday, the chancellor hinted she would back an expansion of Heathrow Airport to boost the economy, despite environmental concerns.
The Treasury is looking at whether to support a third runway at Heathrow and approve a second runway at Gatwick, but such projects would not start for some time.The Treasury is looking at whether to support a third runway at Heathrow and approve a second runway at Gatwick, but such projects would not start for some time.
In addition, Reeves said regulators needed to "regulate for growth" following the ousting of the chair of the UK's competition watchdog by government ministers on Tuesday. The potential plans come as figures revealed interest charged on government debt hit £8.3bn, the third-highest December repayments since monthly records began in 1997.
Reeves said that Marcus Bokkerink, who had chaired the Competition and Markets Authority (CMA) since 2022, "recognised that it was a time for a reset". The £17.8bn borrowed by the government last month was much higher than the £14.6bn forecast by the Office for Budget Responsibility, the UK's official forecaster.
Government sources said Mr Bokkerink's departure followed a underwhelming submission from the CMA on ideas on how to stimulate economic growth. Earlier this month interest rates charged on government debt surged in part due to concerns over the UK's economic outlook, but have since fallen back.
Darren Jones, Chief Secretary to the Treasury, said the government's borrowing rules were "non-negotiable" in order to maintain economic stability and growth. Reeves played down any impact the recent market turbulence would have on her meeting her self-imposed financial rules, which pledge not to borrow to fund day-to-day spending, repeating that they were "non-negotiable".
He added the government would "root out waste to ensure every penny of taxpayer's money is spent productively". She also said regulators needed to "regulate for growth" following the ousting of the chair of the UK's competition watchdog by government ministers on Tuesday.
The amount borrowed was the third-highest for a December since monthly records began in 1993. It included a one-off £1.7bn payment from the government to the private sector to repurchase military accommodation. "We want regulators to be part of the mission for growth in a way that they haven't perhaps always been in the past," she added.
The higher borrowing means, with most of the financial year gone, the difference between what the government has spent and what it earns in taxes is £4bn more than official forecasts. Reeves has previously told businesses that she would not be "coming back with more borrowing or more taxes" following her first Budget in October.
But Alex Kerr, UK economist at Capital Economics, said against the backdrop of weak economic growth and high interest rates, "December's overshoot in borrowing is further disappointing news for the chancellor".
He added that while UK borrowing costs had fallen back, they were still higher than at the time of the Budget and suggested Reeves "may need to raise taxes and/or cut spending" in March in order to meet her own rules.
Danni Hewson, head of financial analysis at AJ Bell, suggested "only growth" could offer an alternative to "reigning in ambitions".
Business are set to bear the brunt of tax rises coming into effect in April, with hikes in the National Insurance rate and a reduction to the threshold for employers.
Firms have repeatedly warned the extra costs, along with minimum wages rising and business rates relief being reduced, could impact economic growth, with employers expecting to have less cash to give pay rises and create new jobs.
Research released this week by Lloyds Bank, the UK's biggest money lender, suggested business confidence had "waned further", with price rises to slow activity this year.
The higher borrowing by the government means, with most of the financial year gone, the difference between what the government has spent and what it earns in taxes is £4bn more than official forecasts.
However, that figure includes lots of estimates which are often revised at a later date.However, that figure includes lots of estimates which are often revised at a later date.
January's borrowing figure can also be much different to December's due to lots of people submitting self-assessment tax returns, which increases the government's revenue. January's borrowing figure is typically lower than in December due to lots of people submitting self-assessment tax returns, which increases the government's revenue.
Sign up for our Politics Essential newsletter to read top political analysis, gain insight from across the UK and stay up to speed with the big moments. It'll be delivered straight to your inbox every weekday.Sign up for our Politics Essential newsletter to read top political analysis, gain insight from across the UK and stay up to speed with the big moments. It'll be delivered straight to your inbox every weekday.