Stories

Fri, 22 May 2026

Fri, 22 May 2026 Borrowing in April hit highest level since Covid

Borrowing was higher than expected last month and retail sales fell as fuel prices surged.

* UK public sector borrowing hit £24.3bn in April, the highest total for that month since the Covid pandemic in 2020.
* Borrowing was up £4.9bn from a year earlier and higher than expected.
* Net social benefits rose by £2.7bn due to inflation-linked increases to many benefits and the earnings-linked rise to the state pension.
* Debt interest payments hit a record high for April of £10.3bn, up £0.9bn from a year earlier.
* Retail sales volumes fell in April by 1.3%, with motor fuel sales falling by 10.2% due to motorists conserving fuel after stocking up in March.
* The UK economy grew by 0.3% in the month, confounding analysts' forecasts of a small contraction.
* Analysts have cut their growth predictions for the UK economy due to the surge in energy prices and the impact of the Iran war.
* Borrowing costs have risen since the beginning of the conflict, with financial markets indicating that they think the Bank of England may have to raise interest rates to rein in inflation.
* The government's independent forecaster, the Office for Budget Responsibility (OBR), has forecast that the headroom Chancellor Rachel Reeves had against her rule not to borrow to fund day-to-day spending in five years' time was £23.6bn before the Iran war began.
* The OBR's forecast is now likely to be revised downwards due to the impact of the conflict on borrowing costs and growth.