UK government borrowing in February was £10.7 billion, well above expectations. This is a £14.8 billion black hole on the government’s own independent forecaster’s estimate of £6.5 billion. The unanticipated jump was due to the difference between outlays and tax receipts. As a result, economists have long predicted Chancellor Rachel Reeves will be forced to announce spending cuts in the forthcoming Spring Statement.
The Treasury has insisted that Chancellor Reeves’ self-imposed economic rules are still “non-negotiable,” even in the face of borrowing spike. These rules should be intended to guide fiscal policy and ensure long-term economic stability. Compliance with these rules is likely to come under scrutiny during the Chancellor’s Spring Statement, due next week.
With growing debt underpinning the Chancellor’s fiscal policy approach, economists have made predictions that she will announce public spending cuts to reaffirm her commitments. The promise of these announcements underscored the government’s continuing dedication to fiscal responsibility in the face of flagging borrowing which has come in higher than expected.
The government’s own independent forecaster had initially forecast borrowing to go as high as £6.5 billion in February. This figure started to paint a rosier financial picture. The real number of £10.7 billion represents just how difficult it is for the UK economy to get the books balanced.
Our nation can’t wait any longer for the Chancellor’s Spring Statement to deliver. Everybody is circling around the expectation that the government’s going to fill that fiscal gap and meet its economic targets. The proposed spending cuts recommended by the economists would be a key part of this approach.