Thu, 22 May 2025

Thu, 22 May 2025 Tax rise warning after higher-than-expected UK borrowing

Government borrowing hit £20.2bn in April, leading analysts to say the prospect of tax rises later this year is increasing.

* Government borrowing figures have increased, reaching £20.2bn in April, up £1bn from last year.
* This is the fourth highest April figure since 1993 and experts say it increases the likelihood of tax rises in the autumn.
* The higher borrowing figure could make it difficult for Chancellor Rachel Reeves to meet her self-imposed rules on spending and borrowing.
* Analysts warn that weaker economic growth forecast over the next few months will hit tax receipts, adding pressure on government finances.
* Ruth Gregory from Capital Economics says tax rises are "starting to feel inevitable" due to the poor start to the financial year.
* Matt Swannell from EY Item Club agrees, saying the reinstatement of winter fuel payments and increased defence spending will increase pressure for tax rises.
* Chancellor Reeves had pledged not to introduce additional tax rises beyond those already announced in her October 2024 Budget.
* The latest borrowing figures are higher than expected, with analysts having predicted £17.9bn.
* Tax receipts were more than £5bn higher due to increases in National Insurance contributions paid by employers.
* Government expenditure also rose due to pay rises, inflation costs, and increased pensions and benefits.
* The Office for National Statistics estimates that borrowing for the financial year ending March is now £148.3bn, £11bn more than predicted.
* Experts warn that this could lead to a crisis in public finances and make it difficult for the government to meet its spending commitments.
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