Wed, 23 Apr 2025

Wed, 23 Apr 2025 Pressure builds on UK finances as Reeves pushes for US trade deal

The government borrowed more than expected last year, placing more pressure on the public finances ahead of the full impact of US tariffs.

* The UK government borrowed £151.9bn in the year to March, a £20.7bn increase from the previous year.
* This has added pressure on public finances ahead of the full impact of US tariffs being felt on the UK economy.
* Chancellor Rachel Reeves is set to push for a trade deal with the US to avoid import taxes hitting UK exports.
* The higher levels of borrowing have raised expectations that Reeves may cut public spending or raise taxes later this year to stick to her self-imposed borrowing rules.
* Experts predict that there will be "more tax hikes" due to the increased borrowing and sluggish economic growth.
* The UK's main rule is not to borrow money to fund day-to-day spending, but it will be difficult for Reeves to stick to this without raising taxes or cutting spending.
* The IMF forecasted lower UK growth at 1.1% for 2025, down from 1.6%, due to tariffs on goods entering the US and rising inflation and borrowing costs.
* Debt interest paid by the government increased to £4.3bn last month, a rise of £1.3bn from previous year.
* Experts warn that the cost of government borrowing creates a "very challenging environment" for the government, putting pressure on them to raise taxes again later this year.
* Shadow Chancellor Mel Stride called the borrowing figures "alarming but not surprising", while Liberal Democrat treasury spokesperson Daisy Cooper described them as "damning".
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