September Gov Borrowing Puts Pressure on Chancellor

September’s UK government borrowing came in at £16.6bn. This was:

• £1.5bn. higher than the Office for Budget Responsibility (OBR) forecast in March 2024 at £15.1bn.
• £2.1bn. higher than the same period last year.
• Approximately £1bn. lower than some economists had forecast.

Costs are higher, government debt interest payments are higher than forecast (many expected interest rates to fall sooner and therefore gilt debt rates to have fallen sooner too.

Comment

This may not be comfortable for the new Chancellor, Angela Reeves, as it gives her little room for ‘sweeteners’ and indeed pay rises for public sector workers.

On the flip side, it also gives her room to justify higher taxes for investment income and growth, capital gains taxes, dividend taxation, employer national insurance contributions, property taxation and even inheritance taxes.

Watch this space.  The budget on 30^th October 2024 could be painful for many.