UK government borrowing in September hit the highest level for the month in five years, official figures show, highlighting the challenges facing the chancellor ahead of next month’s Budget.
Borrowing – the difference between public spending and tax income – was £20.2bn in September, up £1.6bn from the same month last year, the Office for National Statistics (ONS) said.
A rise in debt interest payments offset the increased amount the government had raised through tax and national insurance, the ONS said.
Borrowing over the first six months of the financial year has now reached £99.8bn, which is up £11.5bn from the same period last year.
The figures add to the pressure on Chancellor Rachel Reeves, who is expected to raise taxes in November’s Budget in order to meet her self-imposed rules for government finances.
September’s figure was slightly less than analysts’ expectations of £20.8bn, but was just above the £20.1bn that had been projected by the government’s official forecaster, the Office for Budget Responsibility, in March.
Speaking to the BBC’s Today programme, Capital Economics chief economist Paul Dales said the chancellor would “love tax receipts to be higher” but that it would depend on faster growth in the economy.
Capital Economics is projecting that the government will have to raise £27bn in the Budget, with “higher taxes on households having to do the heavy lifting”.
Although tax income in September was higher than last year, in part due to the increase in employers’ national insurance contributions, spending also increased.
This was partly due to pay rises and inflation increasing the government’s day-to-day running costs, as well as inflation-linked increases to state benefits.
The government also had to pay £9.7bn in debt interest, which was up by £3.8bn from the same month last year.
Public sector debt in the UK is now estimated to be at 95.3% of gross domestic product (GDP) and remains at levels not seen since the early 1960s.
Responding to the figures, Chief Secretary to the Treasury James Murray said the government would “never play fast and loose with the public finances”.
He reiterated the government’s aim of bringing down borrowing, to be rid of “costly debt interest, instead putting that money into our NHS, schools and police”.
But shadow chancellor Mel Stride said that borrowing was “soaring under this Labour government”.
“Rachel Reeves has lost control of the public finances and the next generation are being saddled with Labour’s debts,” he said.
The new figures from the ONS include a correction to earlier data, when an error had been made in how VAT receipts had been added.
