Public sector borrowing has surged past official expectations by more than £20 billion so far this financial year, piling pressure on Chancellor Rachel Reeves ahead of next week’s Spring Statement.
Figures from the Office for National Statistics (ONS) show that in February alone, the government borrowed £10.7 billion—making it the fourth-highest total for that month since records began in 1993 and higher than economists had predicted.
This brings total public borrowing between April 2024 and February 2025 to £132.2 billion—£20.4 billion above the £111.8 billion forecast by the Office for Budget Responsibility (OBR) at the time of the October Budget.
The data has raised doubts about whether the chancellor can meet her fiscal rules—most notably the requirement to ensure day-to-day spending is covered by tax revenues within five years and to reduce debt as a share of GDP in the final year of the OBR’s forecast.
Economists now believe Reeves’ already narrow £9.9 billion margin for manoeuvre may have eroded significantly due to sluggish economic growth and rising borrowing costs.
Dennis Tatarkov, senior economist at KPMG UK, said: “There may not be much room for the chancellor to defer major tax and spending decisions to the autumn budget.”
Alison Ring, director of public sector and taxation at the ICAEW, echoed that view, suggesting the February figures could “force [Reeves’] hand” ahead of the planned spending review in June.
The ONS reported that debt servicing in February remained high at £7.4 billion—unchanged from the same month last year. Public sector net debt now stands at 95.5% of GDP using the traditional measure, while the newer preferred measure—net financial liabilities—puts it at 82.9%, up 2.3 percentage points year-on-year.
While tax revenues climbed £34.3 billion to £941 billion in the year to date, public spending rose even faster, up £41.7 billion to over £1 trillion.
With next week’s Spring Statement expected to include new public spending cuts, the government has already begun scaling back benefits for young and disabled people, citing a £5 billion saving.
Darren Jones, Chief Secretary to the Treasury, said: “We must go further and faster to create an agile and productive state… going through every penny of taxpayer money line by line.”
Meanwhile, the economic picture is clouded by geopolitical tensions and market volatility. The Bank of England has kept interest rates on hold at 4.5% and signalled a cautious path to easing. It has also warned that global uncertainty, fuelled in part by President Trump’s shifting tariff policy, could further constrain growth.
The OBR is widely expected to revise down its 2025 GDP forecast from the 2% growth projected in October.
Markets responded with caution: sterling slipped 0.22% against the dollar to $1.29, while the FTSE 100 dipped 0.44% to close at 8,663.59.
