UK borrowing surges past official forecasts as Chancellor prepares for first budget

Chancellor Rachel Reeves is facing a challenge as she prepares for her first , with new data showing government borrowing has exceeded predictions.

The Office for National Statistics (ONS) reported that public sector net borrowing for the first half of the financial year hit £79.6bn – an increase of £1.2 billion from the previous year and £6.7bn more than the Office for Budget Responsibility (OBR), the independent fiscal watchdog, had anticipated.

READ MORE:

Last month saw government borrowing climb to £16.6bn which is £2.1bn more than the same period last year and represents the third highest September borrowing on record, driven by rises in public sector wages. This occurred despite a reduction in central government benefit payments, partly due to Labour's move to means test the winter fuel allowance, which is distributed in November and cost about £2bnlast year.

Although September's borrowing was lower than the £17.5bn forecasted by most economists, the year-to-date figures still exceed OBR's estimates, complicating matters for Ms Reeves as the Budget approaches. Treasury Chief Secretary Darren Jones highlighted the precarious state of public finances, indicating that the October 30 Budget will involve "difficult decisions".

He remarked: "We have inherited a £22bn black hole in the country’s public finances, including no plan to fund pay deals for millions of public sector workers."

"Strikes cost at least £3bn last year, so it was the right thing to do to end those damaging disputes."

"Resolving this black hole at the Budget next week will require difficult decisions to fix the foundations of our economy and begin delivering on the promise of change."