Home Business News Chancellor delivered a blow as government borrowing higher than forecasted

Chancellor delivered a blow as government borrowing higher than forecasted

by Thea Coates Finance Reporter
23rd Apr 24 11:49 am

Official figures released by the Office for National Statistics (ONS) reveals that in the last financial year borrowing went past initial forecasts to £120.7 billion due to benefit and wages increases.

The Chancellor has been dealt a hammer blow as a result, and estimated public sector borrowing in the full year was £7.6 billion, which is a lot less than 2022/2023, however this was still £6.6 billion more than what was predicted by the Office for Budget Responsibility (OBR).

The OBR did forecast borrowing in the year to end of March of £114.1 billion, which comes as borrowing in the month of £11.9 billion which is £4.7 billion less compared to the previous year, but higher than £10 billion which was expected by economists.

Jessica Barnaby, ONS deputy director for public sector finances said: “Spending was up about £58 billion, with increased spending on public services and benefits outstripping large reductions in interest payable and energy support scheme costs.”

There could now be less scope for Jeremy Hunt to give any tax giveaways before the upcoming general election.

Andrew Goodwin, senior economic adviser to the EY Item Club, said: “Unless the Chancellor is prepared to assume even greater spending restraint, it’s unlikely there will be another tax-cutting fiscal event before the election.”

Rob Wood at Pantheon Macroeconomics said: “We expect the Chancellor to cut taxes again before a likely October or November general election, despite borrowing overshooting his forecasts.”

He added: “Hunt can plan for another year of unrealistically weak public spending to generate ‘headroom’ against his fiscal rules and thereby manufacture the funds to cut taxes.

“The next government will, therefore, face a tricky choice between raising taxes to fix creaking public services or holding the line on the Chancellor’s recent tax cuts.”

A spokesman for the Treasury said: “Debt increased in recent years because we rightly protected millions of jobs during Covid and paid half of people’s energy bills after (Vladimir) Putin’s invasion of Ukraine sent bills skyrocketing.”

He added the Government “must stick to the plan to get debt falling.

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