Britain borrowed £15 billion to balance its public finances last month, surpassing expectations, according to new figures from the Office for National Statistics. However, borrowing for this financial year is nearly £17 billion lower than forecasted, creating an opportunity for potential policy changes in the upcoming autumn statement.
In October, public sector net borrowing excluding public sector banks rose to £14.9 billion, which is £4.4 billion higher than October 2022 and also greater than September’s £14.6 billion. Economists had predicted a smaller deficit of around £12 billion.
While this marks the second highest borrowing for October since records began in 1993, it is still significantly lower than October 2020, when pandemic-related spending pushed the deficit to almost £20 billion. Overall, borrowing for this financial year stands at £98.3 billion, almost £22 billion more than the previous year.
Despite some upward revisions to borrowing in recent months, it remains £16.9 billion less than the Office for Budget Responsibility’s forecast in March 2023. This provides Chancellor Jeremy Hunt with some “headroom” to either increase spending or implement tax cuts while adhering to the country’s fiscal rules.
In response to the news, Hunt emphasized the importance of responsible financial management and pledged to focus on boosting business investment and employment in order to facilitate economic growth.
The potential for tax cuts was also highlighted by Prime Minister Rishi Sunak, who expressed his intention to reduce the overall tax burden gradually and sustainably over time. Sunak’s focus is primarily on supporting the “supply side” of the economy to stimulate growth.
In addition, the Treasury Committee is scheduled to question Bank of England Governor Andrew Bailey and members of the Monetary Policy Committee today regarding inflation and economic data. The committee will likely inquire about wage growth, unemployment, and the potential risk of overly tight monetary policy.
Q: How much did Britain borrow to balance its public finances last month?
A: Britain borrowed £15 billion.
Q: Is borrowing for this financial year higher or lower than forecasted?
A: Borrowing for this financial year is nearly £17 billion lower than forecasted.
Q: Will the Chancellor announce tax cuts?
A: While the potential for tax cuts exists, it has not been confirmed whether the Chancellor will announce them in the upcoming autumn statement.