Britain in the Red: Labour racks up the highest EVER borrowing outside of Covid in October as Rachel Reeves splurges on public sector pay and piles money into services_Nhy
Britain has racked up the highest ever October borrowing outside of Covid as Labour splurges on public sector pay and services.
Government borrowing hit £17.4billion last month, far higher than the £13.3billion pencilled in by analysts.
The official figures have only been higher in October once since records began – when the pandemic was raging in 2020.
The grim data raises fresh questions about the direction being taken by Keir Starmer and Rachel Reeves – who three weeks ago unveiled an extraordinary Budget of tax hikes, extra borrowing and spending.
Experts warned that the dire situation could mean the Chancellor hammers Brits again in the coming years, despite the burden already being set to reach an all-time high.
The Office for National Statistics (ONS) said public sector net borrowing was £1.6billion higher than the same month last year.
Alarmingly central government debt interest rose to £9.1billion for the month – the highest October figure on record.
Government borrowing hit £17.4billion last month, far higher than the £13.3billion pencilled in by analysts
The grim data will raise fresh questions about the direction being taken by Keir Starmer and Rachel Reeves
Since the fiscal package on October 30 markets have been pushing up the costs of servicing the UK’s £2.8trillion debt mountain even further,
ONS deputy director for public sector finances Jessica Barnaby said: ‘This month’s borrowing was the second highest October figure since monthly records began in January 1993.
‘Despite the cut in the main rates of national insurance earlier in 2024, total receipts rose on last year.
‘However, with spending on public services, benefits and debt interest costs all up on last year, expenditure rose faster than revenue overall.’
Shadow chancellor Mel Stride said: ‘Today’s figures show the highest monthly borrowing outside of the pandemic.
‘They are a direct result of Labour’s decision to hand out inflation busting pay rises to their union paymasters without any reforms in return. And this is before the impact of the Budget…’
Capital Economics warned that more tax rises could be looming.
‘October’s disappointing public finances figures underline the fiscal challenge that the Chancellor still faces, despite the big increases in spending and taxes announced in the Budget,’ the analysts said.
‘And while the Chancellor has downplayed the chances of further tax-raising measures, if she wants to increase day-to-day spending in future years, she may need to raise taxes to pay for it.’
Chief Secretary to the Treasury Darren Jones said: ‘We inherited a £22billion black hole in our public finances from the previous government.
‘At the Budget we addressed this, fixing the foundations and putting public finances on a sustainable footing to rebuild the country.
The ONS said central government departmental spending on goods and services increased by £2.5billion to £36.9billion in October on the back of ‘pay rises and inflation increased running costs’.
This includes the impact of above-inflation pay deals which were announced after the Labour Government took office, with NHS staff and teachers witnessing backdated pay increases from last month.
Overall central government spending was £88.5billion in October 2024, £3.9billion more than the same month a year earlier.
Meanwhile, central government receipts – the amount of money it receives, predominantly through taxes – rose by £2.9billion to £81.2billion for the month.
The rise was supported by increases in corporation tax and income tax payments.
The ONS said public sector net borrowing as a whole stood at £96.6billion for the financial year to October, as a result of the new figures.
It added that public debt, excluding state ownership in banks, was estimated at 97.5 per cent GDP at the end of October.
Alarmingly central government debt interest rose to £9.1billion for the month – the highest October figure on record
