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Thu, 23 Apr 2026

Thu, 23 Apr 2026 UK borrowing lowest for three years but Iran war clouds outlook

The improvement in government finances is unlikely to last, analysts say, with the impact of the Iran way yet to hit.

* Annual UK government borrowing has fallen to £132bn, a three-year low.
* Analysts expect borrowing to worsen this year due to inflation and potential energy price support measures.
* Energy prices have surged since the Iran war, pushing up petrol and diesel costs and increasing inflation.
* The International Monetary Fund (IMF) predicts the UK will be hit hardest by the energy shock from the Iran war.
* Weaker economic growth is likely to lead to slower tax revenues and higher borrowing costs.
* Capital Economics estimates that borrowing could rise to £145bn this year due to targeted energy price support, high interest rates, and a weakening economy.
* Pantheon Economics expects an increase of around £12bn in interest payments this year and warns that any further fiscal support will require additional borrowing.
* The Office for National Statistics (ONS) said borrowing as a proportion of GDP was 4.3% - the lowest since 2019-20, just before the Covid pandemic.
* Economists warn that the outlook for the UK is set to become more challenging and speculate about the impact on the chancellor's financial rules.