Chancellor Rahel reeves Another shock after unexpectedly high -borrowed data is covered by warning In November budget Now look “unavoidable”.
The highest August borrowed for five years forecast £ 18bn, according to £ 3.5bn more than August 2024, National statistics office (ONS).
Increasing interest on government loans also promotes in any way Ms. Reeves’ controversial national insurance tax raid unveiled in last year’s budget, According to ONS.
Research and Policy firm WPI strategy chief economist Martin Beck said: “£ 10 billion buffer Chancellor The pencil against his major fiscal rule in March has almost certainly gone. This means that tax looks unavoidable in November. ,
The Chancellor has already accepted that the economy is “not working well” as he promised to get a “tight grip” on spending his budget on 26 November.
Before this latest shock, Independent It was said that she is considering a new tax raid by starting a gambling levy to increase capital gains and to help closure an estimated. £ 40bn black hole In his budget.
AJ Bell’s investment director Ras Mold said: “The alarm’s bell is ringing in the treasury, after the new figures, public finance is shown in a worse position than expected. It is saying something, expectations were already rock bottoms.”
He said: “It makes Chancellor Rahel reevesThe work of plugging the black hole is even more difficult and increases the possibility of a swath of uncomfortable decisions in the November budget. ,
Senior economist Elliot Jordan-Dok, a senior economist at Pantian Macroeconomics, said the figures borrowed for the year were “ugly” and meant that the work in front of Ms. Reeves was now very bad.
He said: “Today’s data shows that the Chancellor will need to increase more than £ 20bn taxes that we had earlier estimated.
“We still expect the Chancellor to fill the fiscal holes with cuts in the fiscal hole secretly and with an increase in sin.”
The new figures show the highest August borrowing since 2020, largely compared to £ 12.8 billion expected by most economists. Seriously, it was £ 5.5 billion more than the UK’s independent fiscal guard, Office for budget responsibility (OBR), in March.
Predictions from OBR on the state of the economy will tell Ms. Reeves at the end of this year how much room for the maneuver shed in the budget.
Treasury’s Chief Secretary James Murray stressed that the government has “plans to borrow as the taxpayer’s money should be spent on the priorities of the country, not on loan interest”.
He said, “Our focus is on economic stability, fiscal responsibility, unnecessary red tape, tearing the garbage from our public services, running further reforms and putting more money in the pockets of working people.”
ONS stated that its estimates for borrowing in recent months were revised more than about 6 billion pounds, as it was found that VAT receipts were less than the first idea.
In summer National Institute of Economic and Social Research (NIESR), a major economic think tank, warned Reeves An “impossible trillumma” faces and taxes should increase or tear its major lending Rule To fill £ 50bn black hole left by labor U turn, High lending and dull economic development.
Government of government Embarrassing climb on planned welfare deduction Saw the profit improvement of labor almost completely, with. Savings from the bill is nothing from £ 5BN,