Fri, 21 Mar 2025

Fri, 21 Mar 2025 Government borrowing higher than expected as pressure builds on Reeves

The latest figures for the UK economy add pressure on Chancellor Rachel Reeves ahead of her Spring Statement next week.

* UK government borrowing was £10.7bn in February, higher than the forecasted £6.5bn.
* This adds pressure on Chancellor Rachel Reeves ahead of her Spring Statement next week.
* Economists warn that the increased borrowing raises the risk of Reeves missing her self-imposed borrowing rules.
* Most governments have such rules to reassure investors and maintain credibility with financial markets.
* The Chancellor has promised not to raise taxes further or return to austerity for public services, leaving few options.
* Economists predict further spending cuts, possibly on top of existing welfare cuts, in the Spring Statement.
* The Office for Budget Responsibility is likely to conclude that Reeves's buffer has been "wiped out".
* A freeze on incapacity benefits and stricter tests for personal independence payments are among planned changes to the benefits system, expected to save £5bn a year.
* Defence spending will be increased, but at the expense of the international aid budget.
* The Liberal Democrat Treasury spokesperson claims that the Chancellor's plan is not working and will "hammer small businesses" with National Insurance increases.
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