Financial News: UK Government Borrowings Overshoot Estimate

UK Government Borrowings Overshoot Estimate

(RTTNews) - The bigger-than-expected UK public sector net borrowing in June highlights the challenges faced by the new government.

Public sector net borrowing decreased GBP 3.2 billion from the last year to GBP 14.5 billion in June, marking the lowest June borrowing since 2019, the Office for National Statistics said Friday.

However, the latest figure was GBP 2.9 billion higher than the GBP 11.6 billion forecast by the Office for Budget Responsibility and also above economists' forecast of GBP 12.9 billion.

In June, central government receipts advanced GBP 1.2 billion, while expenditure decreased by GBP 2.1 billion from the last year.

The ONS said the interest payable on central government debt was GBP 7.4 billion, the lowest in any June since 2020.

In the financial year to June, government borrowed GBP 49.8 billion. The figure was GBP 3.2 billion more than the GBP 46.6 billion forecast by the OBR.

As a percentage to gross domestic product, public sector net debt came in at 99.5 percent at the end of June.

Although the budget deficit is on track to exceed the official 2024/25 forecast, the OBR may grant the Chancellor a bit more wiggle room to loosen fiscal policy in an autumn fiscal event, Capital Economics' economist Alex Kerr said.

"But we doubt there will be much room to announce big changes on top of the £8bn increase in spending and equivalent rise in taxes outlined in Labour's manifesto," the economist added.

In her first speech as Chancellor, Rachel Reeves said, "All governments face difficult choices - and I will not shrink from those choices."

"Those choices are made harder, however, by the absence of the economic growth necessary to not only balance the books but also to improve living standards," said Reeves.

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